ENVIRONMENTAL DESIGN AURARIA LIBRARY
NEIGHBORHOOD ASSISTANCE PROGRAM:
NEIGHBORHOOD ASSITANCE PROGRAM:
An Evaluation by
Michael M. Landy
B.A., State University of New York at Buffalo, 1979
A thesis (Studio 3) submitted in partial fulfillment of the Requirements for the degree of Masters of Urban and Regional Planning/ Community Development, College of Environmental Design, University of Colorado at Denver August 1981
TABLE OF CONTENTS
Relevancy of Topic Methodology Organization of Report
Goals and Objectives
How the Program Works: Legislation and Administration
Types of Support
Types of Projects
Areas of Impact
Allocation of Credit
Does the NAP Directly Involve Business and Industry?
Does the NAP Encourage Business and Industry to Assist Neighborhood Organizations?
Does the NAP Improve Impoverished Communities?
The NAP as a Business Incentive
The NAP as an Effective Tool for Neighborhood Improvement
VI. CASE STUDIES
This thesis is about the Neighborhood Assistance Program (NAP). The NAP encourages maximum local involvement and control in solving local problems by utilizing indigenous resources and minimizing government intervention. The NAP also provides a state tax credit^ incentive to business and industry which sponsor or contribute to projects aimed at improving the quality of life for residents of rural communities and urban neighborhoods. The focus of this research is on the urban application of the program. The state's role is to provide advice and incentives for business participation. The responsibility for the development and financing of programs rests with the local community. Projects which qualify fall into one of six categories: community services, crime prevention, education, job training, neighborhood assistance, and business expansion/relocation. It is an innovative attempt to address neighborhood problems through local means.
The purpose of this thesis is to explore two hypotheses:
1) The NAP is an effective incentive for business participation.
2) The NAP is an effective tool for neighborhood improvement in impoverished urban areas.
The ascertainment of whether the NAP is an effective incentive for business participation is based on the review of three areas: 1) the NAP as a competitive incentive, 2) the business role, and 3) the present level of business participation. THe NAP evaluation as an effective tool for neighborhood improvement was based on two areas: 1) the development of neighborhood organizations and 2) the improvement of impoverished communities. The study of these areas will lay a basis for conclusions and recommendations.
Relevancy of Topic
This topic is particularly relevant today. Many of the federal programs that have supported and developed projects in the urban areas (e.g, VISTA, CETA, Community Development Block Grants, Urban Development Action Grants, HUD Section 8) are being restricted due to limited funding. There is a need to find different and new sources of funding for such endeavors. The other major source of funding for neighborhood improvement is foundation funding, but traditionally foundations haven't considered neighborhoods as a major focus of their efforts. But, some foundations hayerecently started supporting such projects (Ford Foundation, C.S, Mott Foundation, Piton Foundation, etc.) and a current study on philanthropy indicates that this trend is growing and what is needed is...
A revised understanding of the uniquely private philanthropic role...by supporting groups at a very local level, such as neighborhood organizations, foundations can provide citizens with leverage they need to resist the neglect and inertia of large bureaucracies.
But, while the foundations are re-evaluating their priorities, where will the needed assistance come from? The current Republican administration is placing much of the burden onto the private sector: individuals, organizations, and particularly the business community. Individuals and organizations can carry only part of the load and they are doing that already.
Business has been virtually an untapped source of two of the most needed resources: money and development expertise. The key is to involve business in sponsoring and developing neighborhood projects. There are various innovative programs being developed in which the business community is directly involved: Neighborhood Housing Services, the Dayton Hudson "Program of Community Giving", the Triangle Partnership Program, and others. The role of business varies
from consultant to financial backer to partner, depending on the particular program. But overall, business has been an underutilized source of support for neighborhood projects.
The Neighborhood Assistance Program is a new program that was developed in the late sixties. The program has only recently become more fully utilized. Business is encouraged to take a leading role in sponsoring and developing projects in impoverished urban neighborhoods. Now seems to be a most appropriate time in America to promote this type of participation by the business community in neighborhood improvement efforts. The role of government, in general, is being diminished. The role of business is expected to grow considerably to fill this "gap" formed by federal government cutbacks.
The Neighborhood Assistance Program is specifically relevant to Colorado. Neighborhood assistance legislation has been introduced twice to the state legislature in the past three years. There is an effort being made to have the bill introduced again in the coming '81 fall session. Colorado is experiencing a steady economic growth as industries and corporations are moving into the Denver metropolitan area and Western Slope areas. At the same time, those areas have limited funding to address community and social problems which are also growing. This is a fortuitous time to get such a program established.
There is little written material on this relatively new and obscure program. An extensive primary research effort was undertaken to obtain information about the NAP. This involved first contacting local resources for "lead" information: Colorado Department of Local Affairs, National Conference of State Legislatures, U.C.D. Center for Community Development and Design, Catholic Archdiocese of Denver, and Representatives Richard Castro and Federico Pena.
Many of these sources cited national organizations and agencies as references.
A few local resources identified states which had adopted the program.
The national organizations were focused on in order to identify all states utilizing the NAP. These entities included National Congress for Community Economic Development, National Self-Help Resource Center, National Association of Neighborhoods, Conference on Alternative State and Local Public Policies, Center for Public Resources, etc. These sources were useful for identification of existing and proposed neighborhood assistance programs and for suggesting related written material. In all, seven states were identified.
These seven states were contacted and a three to four month correspondence period ensued. This was comprised mostly of telephone interviews with directors of the program (in states where the NAP existed) and with those responsible for drafting this legislation in states where the NAP is in a proposal stage. This was a two-way information system. Many states requested that the information that the information that had been collected from other states be sent to them. This made the research process much easier. By allowing an exchange of important information, rather than a one-way system, both parties experienced beneficial results. Overall, the method was lengthy and costly, but the information could not have been obtained more efficiently by using other methods.
Organization of Report
The paper is arranged in five major sections: background, analysis, conclusion, recommendations, and case studies. The background section covers the program origin, the goals and objectives, and a detailed program description. The analysis is an attempt to draw out and discuss major points of the program. The analysis addressed three areas: business involvement, neighborhood organization development, and neighborhood improvement. The background and the analysis
lay the basis for the conclusion. The conclusion is the evaluation of the program in light of the presented evidence. Recommendations for increased effectiveness are then made on two levels. The first set of recommendations addresses the program as a generalized whole; the second set addresses a specific state, Colorado. The case studies (Pennsylvania, Indiana, and Colorado) are provided in the Appendix for inspection of program specifics. A resource list is included in the Appendix. These are not necessarily sources for NAP information, but are good general references when inquiring into neighborhood development research areas.
The NAP was (redeveloped at a most appropriate time. It was a time of uprisings and riots. It was a time when the federal government was doing more to destroy neighborhoods than to revitalize them. It was also a time when neighborhoods began to fight back. Local organizations and strategies were being developed in order to deal with neighborhood and citywide problems.
The concept of local intervention in local problems with indigenous resources was rethought and re-established in Pennsylvania in 1967.
It appeared in a form which hasn't been popular since the depression days. Business and industry were to sponsor, develop, and implement projects in the depressed areas of the state, with a focus on the heated urban areas. Since business and industry haven't usually participated in neighborhood projects, it would be necessary to persuade them to consider such worthy endeavors.
It seemed logical that they would respond to some financial enticement. So the legislature of the State of Pennsylvania drafted and passed a bill creating a tax credit for businesses and industries which sponsored, developed, and imple-meneted a project in a depressed area. The tax credit was equal to 50% of the value of the contribution. The tax credit provided a better "break in the total amount of taxes paid, when compared to the federal tax deduction for similar contributions to non-profit organizations (IRS 501(c)(3)). The sponsor also had a greater say in how its taxes were used and the benefits derived from those taxes were more tangible (than if they had gone the usual bureaucratic route).
It seemed that the idea might work, and in many ways, it did.
To date, there are four such programs operating in Pennsylvania, Indiana, Missouri, and Florida. There are seven states in which it is in the proposal/
drafting stage: Illinois, Wisconsin, Colorado, Kansas, Ohio, Virginia and Oregon, The State of Michigan has the program on the books, but it is temporarily inoperative.^ The information in this work is based on seven of these states: Pennsylvania, Indiana, Missouri, Florida, Illinois, Wisconsin and Colorado. The research was limited to this group because of lack of information on Kansas, Michigan and Ohio. The program was just recently drafted in Virginia and Oregon. Since the inception of the Pennsylvania program in 1967, the state credit limit has increased from $1 million to $8,75 million, the focus of having business and industry develop and implement projects has shifted to non-profit community service organizations, and the types of eligible sponsors and eligible projects had been broadened.
Many states have simply adopted the "Pennsylvania model": Missouri, Indiana, Illinois and Colorado. Florida and Wisconsin have developed interesting variations. The programs may vary in certain aspects, but the goals and objectives are consistent throughout.
GOALS AND OBJECTIVES
The heart of the program lies in the concept of direct involvement of business and industry in the problems of disadvantaged citizens and their neighborhoods, drawing forth active commitment of financial assistance and manpower expertise.
By becoming directly involved, business and industry can join forces
with local groups in restoring the physical, social, and economic fabric of the
community. The partnership concept is an important element of the program:
Direct contact between the business community and the neighborhood is essential in forming the partnership required in addressing neighborhood problems.
The goal of the program is to directly involve business and industry in assisting neighborhood groups to improve impoverished communities. The objective
of the NAP is to encourage private business through a tax incentive to provide assistance and/or establish projects which will improve conditions in impoverished areas. This can only occur through active support, dialogue, and participation between the neighborhoods, business and industry, and the local government. The underlying theme is to maximize local involvement and control in solving local problems by utilizing indigenous resources and to minimize external intervention by governmental entities.
The neighborhoods have had their problems "solved" by many outsiders over the years. It is time to at least try to resolve these problems by those affected and on an appropriate level. Through this program, the local taxpayer can decide exactly how some of its taxes should be used, the neighborhood organizations are integrally involved in all stages of the project, and the state government has a vehicle which allows it to address local problems on a one-by-one basis without having to develop a statewide program. By encouraging local organizations to take on these problems, a feeling or spirit of self-reliance and independence is generated. The entire program process helps to create/develop a different "mindset" in all the participants in dealing with local problems.
HOW THE PROGRAM WORKS Legislation and Administration
The structure and dynamics of the program reflect the three levels of its development. First is the state legislature which writes the bill. Second is the administrative agency which interprets and implements it. The third level is the participants who utilize the program. Since it is a new program requireing the release of state tax money, it must be sanctioned by the legislature.^ The legislature "molds" the program in many ways. They name an
existing entity or create a new one that will administer the program at the
state level, define its roles and powers, and allocate funds for its operation.
The legislature develops the definitions and criteria for the types of projects,
kinds of assistance, and eligible participants. They set the total state and
individual tax credit limits, the percent of credit allowed, the carry over
period, and the designation of high priority credits. They also define the
extent to which the local government will be involved in the program. Almost
the entire cost of the program is due to credits:
The state is involved primarily in publicizing the program and in approving or disapproving proposals. The state's main purpose is to make sure that the target areas and population are being served. This means that 95 to 99 percent of the cost to the state will be the tax credits not administrative costs.
The legislature may have the responsibility to design and define the program,
but it is the administrative agency which interprets, administers, implements
and regulates the program. This agency is very influential in "molding" the
program once it hits the ground.
The administrative responsibilities are divided into three entities: Department of Revenue, a state level office, and the local government. At the state level, the program could be located in one of many departments.
It is often the department in which federal and state monies are funneled
through to community and/or economic development programs. The following list represents the state and the lead administrative agency: Pennsylvania -Department of Community Affairs through the Bureau of Human Affairs; Indiana -Department of Commerce through the Financial Services Division (formerly the Office of Minority Business Enterprises); Missouri Department of Consumer Affairs, Regulation and Licensing through the Division of Community and Economic Development; Florida Department of Veteran and Community Affairs through the Bureau of Housing and Community Development; Illinois Department of Revenue;
Wisconsin "a non-profit community economic development corporation and a for-profit venture capital corporation"; and Colorado Department of Local Affairs. The state level office develops guidelines and sets standards, establishes review procedures and evaluation criteria, monitors projects and processes applications. Although the definitions, criteria and tax limits are developed by the legislature, this entity, through policy development, can have as great an effect in shaping the program as does the legislature.
The most important areas in which policy development influence are: public outreach and information dissemination, types of eligible projects and participants, and the amount of technical assistance that the administrative agency could provide for project development. So, it is this agency that really develops the goals and greatly influences the degree of success or failure of the program.
The Department of Revenue acts as an auxiliary to the main administrative office. Its responsibilities include: the tabulation of allocated credits, certification of non-profit tax status, determination of donation eligibility, and processing necessary applications. The Department of Revenue is the gatekeeper to the state's coffers.
The role of local government is usually defined in the legislative bill. Their responsibility is usually limited to determining if a project is consistent with local development plans. They recommend approval or disapproval of projects, but they do not have the final say. They also do not participate in any prioritizing process. But, the administrative agency would feel more comfortable in approving a project if the local governmental entity also approved. Another role for the "local unit of government" was developed by Colorado. In that bill, the local government could also act as a recipient
and develop a project. Several questions or concerns arise when the local government plays the role of project developer and is simultaneously involved in the review process. This will be discussed in the critical review section.
The two major participants in the program are a) business and industry and b) the neighborhood and community service organizations. The former group can play the role of sponsor and developer, while the latter group is always the developer. Several states allow business to develop and implement projects Pennsylvania, Indiana, Florida and Missouri. The definition and role of the participants will be addressed below.
The developer tends to be a local non-profit tax exempt group which is community service oriented. It can be a community development corporation, a neighborhood organizations or coalition of such organizations, or a city-wide community service organization. Several states encourage business and industry to develop and implement projects; the actual definition of a "neighborhood organization" varies from state to state. In several programs, the focus is on who provides the service; in others the focus is that a service is provided to the indigent. This is where some states philosophically departed from others, and this particular point affects the entire program.
It is interesting to note that the two states which have developed the most strict requirements as to the project developer being neighborhood based, are in the proposal stage (Illinois and Wisconsin). Perhaps their optimism does not yet reflect the political reality of passing such legislation. The state which seems to best represent a true neighborhood orientation is Illinois. A developer is referred to as a "community based organization" which is defined as
an organized group of persons who own property, work, and/or reside within a geographically defined area, having as its purpose the revitalization o the physical, socio-economic conditions of the neighborhood. In addition to neighborhood resident leadership and a Board of Directors elected by this constituency, the organization must maintain a broad participation of its defined area residents in decision making relative to goal selection, mobilization of resources, and execution of projects.
The Wisconsin definition is similar but not as strongly worded. The main points are: open membership, nominal dues, locally elected board, and it
must serve a distressed area or population. These states focus on the neighborhood level to a greater extent than the other states.
The remaining states define the recipient in broader terms. Besides neighborhood based organizations, they include such city-wide community service organizations as schools, churches, YWCA, and Boy Scouts. The definition is interpreted to also include the traditional service organizations such as United Way, American Cancer Society, Alcoholics Anonymous, Salvation Army, etc. Most programs base their definitions on the Pennsylvania bill. The original legislation written in 1967 defines a neighborhood organization as
any organization performing community services in an impoverished area and holding a ruling from the Internal Revenue Service of the United States Department of Treasury that the organization is exempt from income.taxation under the providions of the Internal Revenue Code.
Colorado, Missouri, and Indiana define a neighborhood organization almost
exactly the same as Pennsylvania. Each does add an individual slant. Colorado
includes the "local unit of government" as an eligible recipient. Missouri
and Indiana permit business and industry to develop and implement a project
and thus be eligible for tax credits. This is also true in Florida, where the
focus is on job creation and job training.
The project developer is the primary mover. They must first organize affected groups in the project area. They then must establish priorities, develop a project, verify that the project is consistent with local (public) development plans, and then (if the developer is not also the sponsor) they must find a sponsor for the project. It is their responsibility to "educate" the business community as to the advantages and benefits of the program and project. They must solicit support from prospective sponsors. The recipient and sponsor now begin to package, develop, and implement the proposed project.
The definition of a sponsor is more straightforward. It simply refers to any entity that is authorized to do business in the state and pays a business related tax. The definition usually includes banks, savings and loan companies, insurance companies, corporations, and unincorporated businesses. Missouri does not allow unincorporated businesses to be eligible for the tax credit.^
None of the programs allow individuals to be eligible for credits, except in the case of subchapter 5 corporations. This seems appropriate since the individual stockholders are liable for the business tax.
The role of the sponsor varies with each project and with the type of assistance offered. Theoretically, they should be involved from the planning stages to implementation and evaluation. But, if the type of assistance is cash, their role is often quite minimal unless they really desire to fully participate. When other forms of assistance are provided, such as technical assistance, labor, design work, etc., the level of participation increases.
This is mostly due to the nature of the assistance and the role it plays in the project. Unfortunately, it seems that most sponsors opt for minimum participation. This is almost a 180 turn from the intent of the original Pennsylvania bill.
Types of Support
The types of support which are eligible for a tax credit are almost identical for all states., The different forms include cash, equipment, materials, labor, real estate/rental space, and technical assistance. The support can be used in any phase and for any activity or cost germaine to the project. That decision rests on the two partners. It can be used as seed money or to be "packaged" with other resources, or to take over where other funding has terminated. The support could also be used as leverage against other funding.
This money would be invested in ventures in distressed areas and would be leveraged against private capital, federal monies, and private foundation monies at a minimum of two times and possibly up to six, eight, or even tenfold as the Green Bay CDC did with its commercial project. Thus, each dollar of state tax credit could produce $30 to $100 of in-state investment. This could produce many new businesses in distressed areas and eventually hire and train thousands of people who otherwise would have been unemployed.
The program was structured so that the utilization of assistance is flexible and broad. The only real stipulation is that any assistance provided must be made quantifiable in order to be eligible. This is a minor concern (since cash constitutes a majority of the contributions) and in no way a hindrance to the funding mechanism.
Types of Projects
The range of eligible projects can be generally categorized into six areas: community service, job training, education, crime prevention, neighborhood assistance and business expansion/relocation. These are defined as:
Any type of counseling and advice, general assistance or medical care furnished to individuals
Any type of instruction that enables an individual to acquire vocational skills to become employable or be able to seek a higher grade of employment.
Any type of scholastic instruction or scholarship assistance for individuals or groups.
Any activity which aids in the reduction of crime. Forms of assistance which aid in the physical improvement of any part or all of an impoverished
For a business or industry which (re)locates or expands in a distressed area. The credit is based on the increase of new employment dollars.
A very wide range of projects has been funded through this program. In
Missouri, Youth Education and Health in Soulard, a non-profit organization
in the St. Louis area, has utilized a $48,000 contribution to leverage over
a million dollars in grants and loans in the development of needed housing
for the elderly and low income families in their area. In Indiana, a solar
greenhouse was constructed through $1,631 in contributions by the Community
Action Program in Evansville, Indiana. In Pennsylvania, the Rape Crisis Center
of Montgomery County received $20,000 in contributions. One of the best advantages of this program is its versatility in application and utilization.
It fosters creativity by allowing such freedom in developing projects that address specific needs in a specific locale,
Areas of Impact
The program is utilized in urban centers, suburbs and rural areas. The
majority of the credits are applied in the inner city, and that is where my
concern lies. Eligibility of the area is determined by physical, social,
economic, and health related indices. The federal census is the most
commonly referred to source of this information. But any other studies that
have been completed either by governmental entities, private groups, or even
the neighborhood itself are considered valid also. Some of the special
factors included in this designation are well illustrated by Florida:
The following factors are considered in the designation of a slum or blighted area:
- the percent of housing units built more than thirty years ago
- the percent of vacant housing units
- the percent of housing units lacking some or all plumbing
- per capita income
- the percent change of per capita income from previous year(s)
- the percent of population over 65 and under 18
- the unemployment rate
- the percent of population below poverty level
- the per capita taxable property value
- the percent change in per capita property value from previous year(s)
- the per capita local taxes levied in the area 6
Florida has focused on the economic and physical indices. All of this information is readily attainable from existing city, state, adn federal sources. Pennsylvania also goes to some length in listing specific factors which are considered, but has more of a balance between economic, social, and health related indices. (See case study.) The intent is clear that this program is meant to be utilized in areas of need, not affluence.
The determination of these eligible areas is usually made at the time of the initial request on the part of the sponsor and/or developer. These areas are not technically predetermined, but for some the eligibility status
is quite obvious. The method just described is valid for the normal 50% tax credit. But Pennsylvania and Missouri have created a 70% tax credit for high priority areas. These areas are predetermined at the beginning of each fiscal year as well as the amount of credit available at the 70% rate. This allows the state to focus more directly on areas in greatest need.
Allocation of Credit
The allocation of credit is governed by the state legislature. They decide on the total available state tax credits, individual limits, and the allocation mechanism. The limits vary from state to state:
State State Limit Individual
Pennsylvania 8,750,000 250,000
Missouri 8,750,000 250,000
Indiana 1,000,000 25,000
Florida 3,000,000 None
Illinois 1,000,000 25,000
Colorado 500,000 30,000
Wisconsin 2,000,000 None
The tax credit can be carried over for 5 years in all states except Indiana, where it must be utilized in the year it was granted.
Most state legislatures allocate the credits based on two criteria:
1) a priority listing of problems which need to be addressed and 2) first-come, first served. The priority list is not strictly adhered to, but it provides guidelines on which the administrative agency can base their decisions. The program priorities can be developed by special review committees, the
legislature, the governnor, and/or the administrative agency. All states except Colorado allocate credits on a request basis, but Colorado developed an initial allocation system whereby the total available state tax credits ($500,000/yr.) is divided into 13 administrative and planning regions of the state.^ This will be discussed in greater detail later.
The research for this project required contacting many people and organizations,, The discussions covered the whole scope of the program, from drafting legislation to project monitoring. Out of those discussions and numerous readings (legislative bills, pamphlets, letters, memos, and books), three major themes evolved to form the basis of the program. These were formulated into the goal statement: The goal of the Neighborhood Assistance Program is to directly involve business and industry in assisting neighborhood groups to improve impoverished communities. The goal statement was translated into questions by which to evaluate the program: 1) Does the NAP directly involve business and industry? 2) Does the NAP encourage business and industry to assist neighborhood groups? and 3) Does the NAP encourage the improvement of impoverished communities? Each of these major questions is composed of several subquestions, which when answered should lay a solid basis for evaluation and recommendation.
Does the NAP directly involve business and industry?
In attempting to answer this question, three areas are addressed:
1) whether the NAP is competitive with other similar incentives, 2) the role business and industry play in the program, and 3) the degree or level of participation. These do not address all the issues involved but they do represent the most significant.
Several alternative incentives are available to business. Incentives for business are based on the advantages accruing directly to business as opposed to long term social gains. The nature of business is to survive and
make a profit,, They are "not about" philanthropy. They do not perceive neighborhood improvement as a direct advantage. Therefore, any incentive must be evaluated as to its direct advantage to the business. Four incentives are outlined below: straight investment opportunities, public/private ventures, the NAP tax credit, and the federal charitable tax deduction. These incentives may be comparable, but not necessarily competitive. The first two incentives are based on return on investment while the latter two are based on immediate to long term social gains. As such, the first set is comparable to the second set, but they are not competitive. They are comparable because they all can be progarms aimed at city/neighborhood improvement. They are not competitive because the first set expects a return on investment while the second set does not expect a fiscal return. They expect social gains over a period of time. Therefore the second set is not competitive with the first set because no advantages are accrued directly and immediately to the business. The calculations below will help to illustrate the points.
The simplest way to illustrate the fiscal incentive is to compare three such incentives investment (includes public/private), tax credit and tax deduction. Rather than trying to develop an average return on investment for all businesses, the prime interest rate will serve as the bottom line for return on investment,, The prime interest rate has been between 15-20 percent for the last year (1980-81); the 15% rate will be used as the base. A ten thousand dollar investment at 15% would yield an annual return of $1500. Although other investment (stocks, land, etc,,) may yield more, there is a greater risk involved.
The Missouri sample computation (below) illustrates the "return on investment" for the NAP and the federal tax deduction.
Income Before Contribution and Missouri Corporate Income Tax Missouri Income Tax Deduction Contribution Made No Contribution $250,000 8,320 None Other Contribution $250,000 8,029 10,000 NAA Contribution (50%) $250,000 2.905 10,000 NAA Contribution (70 $250,000 854 10,000
Federal Taxable Income 1st $25,m000 X 1 7% 2nd $25,000 X 20% 3rd $25,000 X 30% 4th $25,000X40% Balance X 46% $240,680 4,250 5,000 7,500 10,000 65,173 $231,971 4,250 5,000 7,500 10,000 60.707 $237,095 4,250 5,000 7,500 10.000 63,064 $239,146 4,250 5.000 7,500 10,000 64,007
Federal Income Tax Due $ 91,923 $ 87.457 $ 89,814 $ 90.757
Federal Taxable Income Federal Income Tax Paid $250,000 91,923 $240,000 87,457 $240,000 89,814 $240,000 90,757
State Income After Federal Income Tax Deduction Missouri Income Tax Deduction 158,077 8,320 152,543 8,029 150,186 2.905 149,243 854
State Taxable Income Missouri Tax (5%) NAP Deduction 166,397 8,320 0 160,572 8,029 0 153,091 7,905 5,000 150,097 7,854 7,000
Missouri Tax Due $ 8,320 $ 8,029 $ 2,905 $ 854
Cash Required Contribution Federal Taxes Missouri Taxes None 91.923 8,320 10,000 87,457 8,029 10,000 89.814 2,905 10,000 90,757 854
Total Cash Required $100,243 $105,486 $102,719 $101,611
Actual Cash Required to Contribute $ 10,000 None $ 5,243 $ 2,476 $ 1,368
The ten thousand sollar "investment" in the NAP actually costs the business $2,476. The "investment" in the federal charitable tax deduction program actually costs the business $5,243. These figures translate to an annual "return on investment" of-$2,476 and -$5,243 respectively. The credit and deduction fiscal incentive isclearlynot competitive to investment opportunities, whether they be private or pub!ic/private ventures. Four examples are given below which illustrate straight investment opportunities, public/private ventures, tax credits, and the federal charitable tax deduction.
The Control Data Corporation's City Venture Corporation is a good
example of business investing in urban development. City Venture Corporation
is a consortium of 15 business and church organizations. The corporation
has been formed to plan, initiate, and manage comprehensive programs for
revitalizing existing urban areas and for creating innovative cities. City
Venture markets its services to communities, cities, states and federal agencies.
Where appropriate, investments are made in private business opportunities and
innovative projects The purpose of City Venture is to demonstrate that the
building and rebuilding of American cities is a growth industry providing
opportunities for private enterprises to realize reasonable, long-term return
on investmentso The corporation's philosophy of urban development is put forth
by Robert M0 Price, President of Control Data Corporation.
The ills of our world today stem from a long list of unmet or underserved societal needs. They include more and cheaper energy; lower food costs; more available and less costly health care; lower cost, more available, and higher quality education; and most important of all more jobs.
Fundamental needs such as these will never be adequately met solely by some series of government programs. Business, as well, must address itself to serving basic needs. And it must do so not as some peripheral philanthropic endeavor, but rather by treating them as business opportunities and subjecting its efforts to the financial discipline normal to business enterprises.
In choosing cities in which to locate, Control Data seeks a government that recognizes the importance of jobs in inner city revitalization; a business community that is willing to invest in its inner city neighborhoods; community organizations that choose a responsible approach to addressing the problems that confront them, with neighborhood self sufficiency as a goal; and a city which chooses a holistic rather than a piecemeal approach to solving its major problems.
City Venture's first effort was the Urban East Project in Minneapolis, Minnesota. The location is adjacent to downtown and the new facility will house Control Data Business and Technology Center, a multi-services home for new small business; Fair Break, Control Data's computerized job-training program; and a manufacturing facility for Magnetic Peripherals, Inc., a computer equipment company. Projects are also in the planning stages in three other areas: Toledo, Philadelphis, and in the Appalacian region of West Virginia.
The Triangle Partnership Program (TPP) is an example of a public/private venture. The TPP is run at the federal level. Funding is provided by C.S. Mott Foundation, the UoS Conference of Mayors, and a National Challenge Grant. Funding is also supplied at the local level by private business and the local unit of government. The program brings together the business community, local government, and neighborhood organizations as equal partners in developing investment type projects (retail, commercial, industry, housing, etc.) which aid the economic development of inner city neighborhoods. Besides a return on investment, the project is expected to help neighborhoods by creating employment and entre-prenurial opportunities. An example is the Hyatt Regency Hotel in Flint,
Michigan. The three partners in the project were the city of Flint, the hotel developers, and a local neighborhood group. Input from all parties were used to plan, design, and construct the hotel. Employment opportunities were created for residents, the neighborhood group benefited from an equity share in the hotel, the developers are realizing a profit, and the city has increased tax base (property, goods and services, and personal income). This was the first TPP project and three other cities have been targeted in the next few years.
The last two incentives, the tax credit and the tax deduction, are not competitive with the two already mentioned. But, the tax credit is competitive with the tax deduction. The Neighborhood Assistance Program provides a tax credit equal to one-half the value of a contribution to a neighborhood improvement project. The federal charitable tax deduction program provides a deduction from the net taxable income equal to the contribution to a charitable organization. The savings in the Missouri sample (and most states) is about $2,700, or approximately 47% less cash is required to donate the same amount of money. This allows additional funds to be spent on philanthropic endeavors or they can be returned to the business. The NAP offers a significant fiscal advantage over the federal deduction.
A very laudable program which uses the federal deduction is the Dayton
Hudson Corporation's Program of Community Giving. It distributes the maximum federal tax deduction allowed for corporate charitable contributions,
5l of pre-tax earnings, through the Dayton Hudson Foundation. In 1978, the foundation distributed $7.1 million to charitable organizations in six states. None of these states have passed Neighborhood Assistance legislation. It would be interesting to see if it could attract support from Dayton-Hudson. It would be quite a significant savings, especially when the donation level is so high!
Role of Business
Another incentive is the impact the business can have on its neighborhood by sponsoring and developing projects, such as day care, job training, housing rehab, etc. The small to medium sized businesses can make positive improvements in their area. In this way, they "assist" their customers as well as their employees. By establishing projects they can strengthen the neighborhood fabric and improve their business' value.
Red Rope Industries in Bucks County (Pennsylvania) provides day care services for 50 children of employees of Red Rope who would not otherwise be able to work due to their inability of taking care of their children during working hours. At the same time Red Rope fulfills its need for employees to keep production stabilized.
The large industries and corporations, which tend to be in non-residential areas, can participate by providing jobs and/or job training and by developing projects for areas where its employees reside. The contributions to local neighborhoods qualifies them for tax credit and helps to address problems in depressed areas,,
Two major barriers to attracting business and industry are the lack of
dissemination of information and the exclusion of certain businesses from
participating. The first barrier may be caused by improper administration or
because the legislature didn't allocate sufficient funds for administrative
purposes. This was cited as a major reason for the first two years of the
Indiana program in which only approximately 15% of the credit was applied for.
There was only one part-time staff person. In July, 1980, the staff increased
to three full-time positions. In the first eight months of the fiscal year
1980-81, over $500,000 in credits had been approved. This represents a 50l
utilization of available state credits. The rise in utilization of credits
was partly due to a significant increase in outreach focused on local neighborhood
organizations and local government.
The second barrier, that of excluding certain businesses, can be very detrimental to the program. The Indiana program has had difficulty attracting the large corporations because the individual credit limit was too low to be worth the effort.($25,000/yr.). This really impacts the program since the large corporations are more philanthropically oriented and have the most money to offer. Missouri, on the other hand, seems to have the opposite problem,
that of excluding the smaller firms. The Department of Revenue had taken
the position that only corporations should be eligible.
Many, if not most, small businesses in urban neighborhoods are (also) unincorporated. If they were viewed as eligible contributors in the program, it would provide an excellent opportunity to further promote a partnership between neighborhood associations and neighborhood businesses. This could have a very important effect in strengthening many community efforts. The problem of eligibility of unincorporated businesses is a significant barrier in utilizing the program in assisting commercial revitalization efforts and other neighborhood-based economic development efforts (one of the purposes of the act). This is true because most business participants in these efforts tend to be sole proprietorships or partnerships rather than incorporated businesses. 4
As can be seen, the exclusion of any major source of support, whether implicit (Indiana) or explicit (Missouri), can leave large gaps in the program.
The role business is encouraged to play is that of sponsor and developer. But, do businesses participate beyond the sponsor level? In the original Pennsylvania legislation, the idea was to have business develop, fund, and implement projects. But today, the non-profits dominate the developer role while a majority of businesses and industries limit themselves to sponsorship. They will participate in other phases of the project only if it relates to the type of assistance offered (i.e. labor for construction, technical assistance for development skills, consulting for management, etc.). Very few businesses actually take on the responsibility of being sole sponsor and sole developer. This mostly occurs only when the business is providing job training and/or employee related services (i.e. day care, transportation, etc.). It is unfortunate that they have limited their role to sponsor in most instances. The program in Missouri lays more importance on partnership building than other states. It encourages business and industry to participate in all phases.
There is a major concern that ariese when strong partnership ties are encouraged. That is, that the value system of business is not the same as that
of the neighborhood. Will neighborhood groups have to compromise their positions in order to secure funding for needed projects? Take the example of a neighborhood organization which is heavily involved in challenging rezoning requests and liquor licensing., They are fighting to keep the number of liquor stores to a reasonable level and to keep a high rise from going up. They are fighting to maintain neighborhood integrity, but this may be viewed as an anti-business stance. It may be difficult for this organization to find a partner. What kind of parity c&n be assured if one side is holding the bucks and they can always find another project to sponsor? This can be a very frustrating ordeal for a neighborhood organization But at the same time, it is an invaluable learning experience.
The partnership may have drawbacks but it also has its advantages. It is at least an attempt to draw the business and corporate worlds into the neighborhoods. Possibly, if they could get a first hand glimpse at life in the ghetto and be presented with the opportunity to try to do something...who knows?
Miracles happen! Another advantage of the partnership is that the presence of business adds a certain amount of legitimacy to the program and to projects in the eyes of the state legislature. They recognize that business can develop and implement projects; "they can get things done." They are also "investing" more money in the program than the state, so, theoretically they have more to lose. As is the case with everything, there are advantages and disadvantages.
In exploring to what degree or level did business participate, three issues were addressed: the amount of dollars of activity, the number of businesses participating, and the length of commitment or return rate. The rate of credit utilization was approximately 60-65% for Indiana and Pennsylvania. Missouri was considerably below that (25-30%). This means that approximately $600,000 worth of credits in Indiana generated $1.2 million worth of activity and approximately
$5o6 million of credits in Pennsylvania generated $11 million worth of project activity! The program in Florida is too new to provide such
information. The level of participation steadily rose each year in all
states. Pennsylvania has teetered between the 60% to 75% utilization rate
in the last few years. It has basically stabilized. But the new federal
budget cuts are expected to push it much higher in the next few years. In
Indiana's three years the utilization rate has doubled each year, from 15%
('78-79) to 30% ('79-80) to the current level of 60% ('80-81).25 In Missouri,
the amount of credits utilized remained the same for the first two years and
then tripled in the third. No state has ever utilized all the allocated
credit. But this shouldn't be considered as an indicator of failure. A more
important indicator is that business participation is steadily rising. The
state just may have higher expectation; let's hope they can be met.
The number of businesses participating and their length of commitment
are two good indicators of the NAP attractiveness. Pennsylvania can really
be the only state in which to apply these indicators. The other programs
haven't been established long enough to provide sufficient information. Since
1967, Pennsylvania has funded an average of 200+ projects a year; this represents
a total of over 2500 projects. Three thousand businesses have participated over
the years. There is a total of approximately 150,000 businesses in the state.
This is a 2% participation rate over the years. Now, this is not to be frowned
on as an insignificant percentage given the fact that the yearly percentage of
businesses in the nation participating in the federal charitable tax deduction
is approximately 5%. And that program has been around a lot longer and received more publicity.
Many corporations participate beyond one year. In Pennsylvania, a majority of corporations who participate do so for several years. The Tasty Bake Company is a good example; it provided funding to the Allegheny West Community Development Program for the last ten years. The levels of funding
grew from $40,000 in 1969 to about $300,000 in 1978. It seems that the problem is teaching businesses about it, because once they know about it and use it, they do so for several years.
Does the NAP encourage business and industry to assist neighborhood organizations?
Some people might argue that this criterion is not valid. One of the objectives of the NAP is to provide assistance to neighborhoods, not specifically to neighborhood groups/organizations. This is the key to the whole program.
The neighborhoods must develop organizations which represent them.
Only through some coordinating effort can many of the problems which plague neighborhoods be solved,
A community organization is essential to any neighborhood that hopes to wing the battle against decline. Too many forces and institutions stand poised to destroy your neighborhood greedy slum lords, insensitive government bureaucrats, uncompromising financial institutions, power hungry legislators. A neighborhood without an organization to fightgfor itself will surely be overrun by one or more of these forces/
And it must be through these groups and/or with the guidance of these groups that projects be developed.
But, what is a "neighborhood organization"? How should it be defined?
A neighborhood organization represents the feelings, emotions, and decisions made by those who reside or work in the area. They care for, love, and respect the neighborhood. Missouri, Wisconsin, and Illinois are three states which incorporated these sentiments in the development of the NAP. Illinois had gone to the greatest detail in defining a neighborhood organization (see Background, p.12)
The organizations are the real focal point in any neighborhood improvement
effort. The existence of such organizations can only help to maximize resident
input into any projects developed in the area. Many other city-wide community
service organizations, community development corporations, and public authorities
establish projects in neighborhoods. In doing so, they often solicit neighborhood
input on their project. But, that's the problem it's their project, not the
neighborhood's. The NAP is clear...
...any project from the beginning is a neighborhood project... it provides for the various elements in a neighborhood working together to solve a problem, finding the money ^execute the solution, and evaluating the success or failure.
The neighborhood should not only participate at the final feedback stage where
most of the plan is set, but throughout the entire development process. The
only way this could occur is through an organization which represents the
neighborhood on a consistent basis. Then there are the other developers which
do not even solicit that minimal amount of feedback. Who is going to stand
up and demand to participate and be taken seriously? Not one person; five or
ten probably won't do either; only a collective effort which truly represents
the neighborhood's power base (residents and business) could accomplish
Another reason why the program should be focused on these organizations is funding related. These organizations have not been traditionally funded through corporate, foundation, or individual philanthropic efforts. The organizations which have been targets for these efforts are the larger community service organizations; e.g. United Way, Salvation Army, American Cancer Society, YWCA, etc. They already have well established sources of funding. There is no argument against these organizations in general; they provide needed services and help many other smaller organizations, and their resources may even be dwindling in
these hard times. But, comparing funding levels between these organizations and neighborhood organizations is irrelevant. The gap is so large, it would be literally immeasurable.
There is another reason why truly neighborhood based organizations should be the sole focus of this program. They desperately need a new avenue of funding in these days of cutbacks. Through NAP funding, the organizational and developmental capacity could be greatly increased. This is the key, "increasing the organizational and developmental capacity of the neighborhood." Only then will they be independent and self-sufficient enough to solve their own problems next time around. The knowledge of "how to do a project" must be transferred to the neighborhood organization. Otherwise, a "patron organization" (United Way, Housing Authority, etc.) will always be coming in to "take care of things."
Not only must the technical skills be developed, but the whole self-help/independence attitude, as well. This lack of neighborhood focus is particularly unfortunate in the case of the NAP since the funding could be used for organizational and developmental capacity building as well as for brick and mortar projects. This is certainly not true for other programs. They do not allow such freedom in applying monies to administrative and operating costs, yet this is where the money is desperately needed to keep the organization alive and functioning.
There always seems to be a "Catch-22." The major reasons just cited for the need to focus on neighborhood groups are the same ones referred to when arguing against such a focus. Those are 1) there is no organization in place which represents the neighborhood and 2) if there is such an organization, it doesn't have the skills or administrative capacity to develop a project. These may be valid observations, but certainly not valid reasons.
Pennsylvania, Indiana, Colorado, and Florida have developed much broader definitions. All the states define the recipients to include all tax exempt community service organizations. Pennsylvania, Florida, Missouri, and Indiana allow businesses to develop their own projects with guidance from affected local groups. Colorado limits business to the sponsor role. There are no major difficulties about a business developing a project in the area it's located in as long as it has the neighborhood support. If the neighborhood is against the project, then it should not be permitted.
Two states include the "local unit of government" as an eligible recipient, Colorado and Florida. I strongly disagree with this position. First, there is a conflict of interest since the city plays a role in project recommendations.
It should not be considered an eligible recipient while having some role in recommending approval or disapproval of projects. This is an obvious conflict of interest (especially if funding is limited, as in Colorado). That is not to say that the city should be an eligible recipient if it doesn't play a role in the recommendation process. There are other reasons that address this.
The second reason is that the city has taxing authority and thus can generate its own income. It also receives state and federal funding. The neighborhood organizations do not have the power to tax and have very limited means of securing income. The neighborhood organizations also receive very little support from state and federal programs. No organization can survive without money. It is imperative to channel NAP funding to these organizations, not to those which have adequate financial resources.
The final reason for not allowing the city government to be an eligible recipient is that by nature and definition, it has city-wide interests and goals. It cannot be as sensitive and responsive to neighborhood needs as a neighborhood
based organization. The city does not have the staff or money to be able to work that closely. For instance, Denver has seven (?) neighborhood planners that are responsible for approximately 85 registered neighborhood groups.
It is quite clear that only the neighborhoods can represent themselves.
The last question in this area is "When one does accept the board definition, does the NAP encourage business to assist these organizations?"
In all the cases I have covered, it has helped these organizations. Since the assistance can be used for any purpose and phase of a program, it is channeled to the most needed areas. The several recipients I spoke to or read about had only positive things to say. One of the most ardent supporters was Sharon Archibald from the Union Sarah Economic Development Corporation in Missouri, Actually, she raved about the program. The interview may have been biased since the organization had just received a $70,000 contribution from the Monsanto Corporation through the NAP. An organization that has been involved with the program for some time is the Allegheny West Community Development Program in Pennsylvania. As mentioned earlier, the NAP encouraged corporate participation, and as a result, many projects have been developed in the Allegheny West neighborhood.
A bit of circumstantial evidence might be useful in supporting this point. In Pennsylvania, United Way successfully lobbied to be included as an eligible recipient. Most states do not qualify United Way because they do not develop and implement projects, and very few neighborhood organizations are United Way agencies.
As a result of United Way being eligible, $300,000 was, and still is, set aside each year to support neighborhood organizations which are not United Way agencies and which have small budgets, e.g. under $100,000 a year.3
I suspect that since United Way has been in the fund raising business for so many years, it can recognize a good source of funding when it sees one.
Does the NAP improve impoverished communities?
The two issues to be addressed here are its actual use in impoverished areas and the improvement in these areas. All the states are quite explicit as to the type of eligible area. In many cases the indicators to assess that eligibility are discussed in the legislation. They include social, economic, physical, and health related indices. These are used to determine if an area is impoverished, impacted, needy, depressed, or blighted, depending on which state is being referred to. From what can be determined, the implementation policy of the administrative agency closely follows the legislative guidelines. It is apparent from my discussions and readings that the program is targeted at and implemented in impoverished areas. A rather lengthy check would be required to actually verify this.
By far, the most difficult area to assess is the improvement of
neighborhoods through the NAP. The two main reasons for this difficulty are
1) the determination of spillover or multiplier effects (which can take years)
and 2) the gathering of relevant information. Not only is it difficult to
determine secondary and tertiary impacts, but it is also lengthy and costly
to gather such information. Both directors of the programs in Indiana and
Pennsylvania felt that it takes 5-10 years before a program can be truly
evaluated. Some of the secondary effects are elaborated on:
By providing job training, child care and similar programs, it will enable people to get jobs ~ not only take them off welfare rolls, but giving them incomes which will put them on tax rolls. By improving and preserving homes and buildings, it will expand the property tax base. By providing youth services and crime prevention programs, it will keep people out of our courts and jails thereby reducing these costs.^
These effects are measurable and quantifiable. But, it takes a determined effort to keep track of all quantitative impacts. It is even more difficult to address qualitative improvement. Both types of impacts need to be assessed before a program can be evaluated.
Perhaps another more observable and measurable effect is available.
One way to determine if a neighborhood is "improved" through the NAP is if development skills have been transferred and if a self-help capacity has been instilled. Can the neighborhood take a larger role next time in planning and developing a project? Can they carry it out independently? It is known that a day care center has been built, but has the skill and knowledge of how to develop, package, construct, and manage such a facility been attained by the neighborhood organization? If so, then there has been true improvement in the neighborhood.
The conclusion is an evaluation of the program based on the information presented. The evaluation is structured by the two hypotheses stated in the introduction: 1) The Neighborhood Assistance Program is an effective incentive for business participation, and 2) The Neighborhood Assistance Program is an effective tool for neighborhood improvement in impoverished urban areas. It has been found that, overall, the NAP is ineffective as an incentive for business participation, and it is inconclusive whether the NAP is an effective tool for neighborhood improvement. Reasons for these conclusions are elaborated on below.
The NAP as a Business Incentive
The Neighborhood Assistance Program is ineffective as an incentive for a majority of businesses. It is, however, an effective incentive for a very small percentage of the business community. The latter case will be briefly discussed first. The businesses that find the NAP an effective incentive are those involved with philanthropic activities (e.g. Dayton-Hudson, Coors, Johns Mansfield, etc.). These businesses have a strong interest in charitable works and are attracted primarily by that motive, not financial reasons. The NAP allows the contribution to "go further" than the federal charitable tax deduction. There is a 26
American Cancer Society). But this is the exception in these programs, where on the other hand, it is normal procedure for the NAP. So, the NAP is an effective incentive for business participating in philanthropic endeavors. But what of the other 90-95%?
The majority of the business community does not participate in
philanthropic activities,, They choose to participate in tax programs and
other activities which are more directly related and beneficial to the business.
Three different tax related programs which are of note are: investment tax
credits, accelerated depreciation schedules, and reduction in corporate income
taxes. The investment tax credit is provided to a firm thatinvests in a capital
asset (plant and equipment). The purpose of the latter two programs is to
increase cash flow, thereby encouraging new investment (Davidson and Pryde; 1981).
These types of activities and programs are more directly beneficial and offer a
greater return on "investment" than the NAP. But, there are two ways to utilize
the NAP in the fashion described above. The first is that credit can be claimed
for the creation of employment opportunities. If a business that was located in
an impoverished area were to invest in capital assets, and as a result five new
jobs were created, they could claim credit for the additional salaries. This
is an indirect "credit" for investment in capital assets as that investment
relates to increased employment. The second way to utilize the NAP along these
lines is to invest in projects that are part of local plans. This is in
reference to the Missouri program...
What isn't well known is that the law also permits corporations to take credits on investments in, as distinguished from contribution to, projects that are part of local community development plans.
For example, corporations may invest in limited partnership shares in a syndication to finance neighborhood rehab and still take the credit, even if t^eir investment is made through the corporations' foundations.
These types of utilization are often highly dependent on the administrative agency's interpretation of the legislative bill. These types of projects appeal to a business' major or primary concerns: survival, improvement and profit.
These businesses do not perceive an investment in the community as a direct benefit to the company. But, by developing projects and sponsoring the provision of needed services, living conditions in the community can be improved. Thus, they are directly affecting a very important component of industry, the labor pool. The development of neighborhood improvement projects can result in a more stable, responsible, and productive employee.
This type of improvement could in the long run be as valuable, and possibly more so, than an investment in capital assets.
The critical points to be made are: the NAP is ineffective in attracting the business community; the NAP could be used for some purposes which are attractive; the business community needs education or help in relating local improvement activities to an increase in value of their establishment; and they must play a larger role in these activities in the future. The business community is an integral part of the socio-economic web of any neighborhood.
This premise msut not only be more fully understood, but also acted on more frequently in the future if a holistic approach to neighborhood improvement is to be fostered.
The NAP as an Effective Tool for Neighborhood Improvement
The Neighborhood Assistance Program has not been determined to be an effective tool for neighborhood improvement. The program appears to work because of the focus, the solving of problems at the appropriate level, its flexibility, simplicity, accountability, and the provision of needed resources.
But, there has not been systematic and consistent documented evidence collected which proves the program to be an effective tool for neighborhood improvement. Overall, the program structure and dynamics are conducive to its utilization as an effective tool for neighborhood improvement, but evidence supporting this has not been generated,,
The program is focused in areas which are determined by the state to be impoverished. The legislative intent is clear and strong. The program is being used to develop needed projects in depressed areas, not swimming pools in the suburbs A major reason for the NAP's succes is that it encourages the solving of problems at and by the appropriate level. Through the program, local people utilize local resources to solve local problems.
By keeping government participation to a minimum and the program dispersed and decentralized, it's relatiyely safe from becoming institutionalized and bureaucratized. The present arrangement allows the program to maintain its flexibility, simplicity, accountability, and efficiency.
The Neighborhood Assistance Program is flexible because it can be used for sucb a broad range of projects and for costs associated with any part of a project (administrative and staff costs, material and equipment, leverage for other monies, etc.)* This flexibility is critical if a program is to address the wide range of problems found in urban neighborhoods. The application process, rules and regulations, and guidelines are easy to understand and simple to follow. Many neighborhood organizations and businesses would not participate if the process was complicated, lengthy, and unclear. This simple process also allows for easy accountability, At this time, not much effort is being taken in any states to thoroughly document the project and associated multiplier or "spillover" effects. This is a major disadvantage to the program, since its
benefits and accomplishments are not readily identified and made available to interested parties (the state legislatures, business and industry, neighborhood groups, and other states). Finally, the program can be effective because of its efficiency. The administrative cost to the state is only approximately 5% of the total program cost. This assures that the maximum amount, of dollars is delivered through the program.
The program is also successful because it attempts to foster a partnership between business and neighborhood groups. This type of cooperation can greatly enhance neighborhood development efforts. The neighborhood organization may bring in local input, and technical skills, while business and industry can provide additional input and technical skills, legitimacy, and cash. Until recently, these types of partnerships have been mostly avoided. But, as is being realized, the business community is virtually an untapped source for money and development experience. They also represent an integral element in neighborhood improvement, A strong tie with business has many advantages, but also a fev/ disadvantages (see Analysis: Role of Business).
A major drawback of the NAP is the lack of focus on neighborhood based organizations. Those organizations must be focused on so they may evolve and gain recognition as a unified neighborhood voice. The neighborhood organizations act as an ongoing common storehouse of accumulated information, experience, and skills. The community can draw on this source when necessary. They can be the core of a formal communication network composed of newsletters, meetings, press releases, special events, etc. The neighborhood organization is an essential structure and force in any neighborhood improvement effort.
In conclusion, the Neighborhood Assistance Program is ineffective as an incentive for business participation,and the program's effectiveness as a
neighborhood improvement tool is inconclusive. The NAP can be effective in impoverished areas, but is severely restricted in these activities due to limited business participation,, This affects the overall functioning and delivery capacity of the program. Without effectively attracting business and industry to sponsor and develop neighborhood improvement projects, and carefully documenting such projects, the program can never fully attain the neighborhood improvement goals set out earlier. Several changes or adaptations are required if the program is to be considered truly successful. The recommendations in the section below address these needed changes.
The recommendations address two separate levels. The first set refers to the neighborhood assistance program, in general. They are recommendations which, if incorporated into state programs, will enhance the attainment of the two major goals: business participation and neighborhood improvement. They do not refer to any state in particular and could only be considered upon inspection of current politics, fiscal conditions, and state statutes. They are addressed to state legislatures and state administrative agencies. This is the level where these decisions are made. The second set of recommendations is directed toward Colorado. These attempt to take into consideration current politics and fiscal constraints and a limited amount of local background.
An increase in the administrative budget allocation is required for extensive outreach and education of local government, business and industry, and neighborhood organizations. An educational process needs to be developed to teach business and industry their social responsibility towards disadvantaged citizens. They are simply not aware of (or possibly simply shunning) the role they must play in improving living conditions. This goes along with an increase in information dissemination. The state administrative agency should provide several methods to obtain information: press releases, state sponsors' workshops, printed material through state offices in related areas: Department of Revenue, community development, economic development, social services, etc. This material should be provided to city governments also. The increase in outreach and education is essential to solidly establish the program.
An increased state tax credit limit is required to attract the larger
businesses. The credit should be available to any person or entity that pays a business related tax. The purpose of these recommendations is to increase the eligible donor pool. Urban areas include large and small corporations and unincorporated business. It is essential to include all of these possible services.
Tax credit should be able to be applied against expansion start-up, or relocation costs of businesses operating in impoverished areas. The credit should be based on some weighted value of increased capital assets (minor weight) investments and increased employee wages (major weight). This would allow business located in impoverished areas to invest in themselves and thus be eligible for tax credits. This would encourage reinvestment in business and result in an increase in goods, services, and employment opportunities in the community.
Tax credits should be applied to contributions which are used by local neighborhood groups to invest in or purchase equity positions in local business.
Tax credits should also be applied against business investment in such ventures where neighborhood organizations are equity partners. This would encourage growth of locally owned businesses and provide an ongoing source of cash for neighborhood organizations. A part of every transaction which occurs in these stores will go towards the neighborhood itself (vis a vis the neighborhood organization). An independent source of income, such as an equity position, can help keep an organization from succumbing to external forces because of lack of funding.
Neighborhood based organizations (as defined by Illinois) should be the primary recipient of the program. The targeting of these organizations will foster cohesiveness and development in the community. If such organizations don't exist, then a citywide community service organization could develop the project. But, a high priority by-product of that project should be the preliminary
forming of a neighborhood organization. The project can serve as an issue and catalyst for neighborhood involvement and eventually organizational development.
Technical assistance, if required, should be provided to all participants. This could be provided by governmental entities, private non-profit, or business and industry. Tax credits could be applied against this assistance or a contribution could be used to cover additional state expenses and thus be eligible for tax credit. This is a critical resource for the development of any project or organization.
A formal communication process should be established between the administrative agency and project participants. This ongoing communication will provide better documentation of project results. This type of information is required to improve the accountability of the program. This information can be presented to the state legislatures, prospective participants, city governments, and organizations and governments from other states.
The allocation of credits should be on a first come basis. A 70% tax credit should be created for high priority areas. This would allow the process to be open and less regulated. The 70% credit could be used to guide resources to especially needy areas. This would encourage a wider distribution of credits rather than legally require it. Some areas that might be included are the San Luis Valley, energy impacted west slope towns, and emergency flood or fire application. If there is to be a regional allocation of credits, the process should be based on population and/or economic factors.
The allocation should not be based on the 13 management and planning regions of the state. How could the distribution of funding for community service type projects be based on administrative factors. This is absurd! The allocation must relate to need, not to the bureaucratic structure.
Business and industry should be able to sponsor and develop projects.
This could open up the range of projects to employment related services: job training, day care, transportation, etc. Business can successfully develop projects and should be encouraged to do so, but with significant input from either the neighborhood or the employees.
The unit of local government should not be an eligible recipient. Their role should be limited to confirming that the project is consistent with local development plans., This could provide more funding for neighborhood based projects. It would also remedy the conflict of interest described earlier. The government in general should play a minimum role in this program, from the local level to the state level.
The application procedure should be simplified. The written agreement of conditions between the donor and city should be excluded. A project description should be drawn up between the sponsor and recipient. That should be reviewed by the local unit to check whether it is consistent with local development plans. A quick approval or disapproval should be given and then it should continue the process as described. This would limit government intervention and simplify the application procedure.
Pennsylvania was the first state to adopt the "Neighborhood Assistance Act" on November 29, 1967?^ The program became operational January 1, 1968.
It's been some time since the bill was originally passed. The creators of it aren't easily found, so there is only speculation as to why it began. It is known that the sponsor was supposed to develop, fund, and implement a project. The state might have been trying to urge business and industry to help solve some of the problems in the inner cities, not turn their back on them. Over time, non-profit organizations took on the role of developer and implementer, while business and industry simply provide the funds. The program is also now found in suburbs and rural areas as well as the inner city. It has grown in size and broadened in scope over the years. It seems to be the most successful program in all the states. Indeed, several are modeled directly after it: Missouri, Indiana, Illinois, and Colorado. This case is the most usable since it has had time to be tested and adapted. There have been several legislative changes. But the most significant changes have occurred through policy evolution at the administrative level.
The original legislation has been amended four times. The affected areas were: credit limits, percent of credit, administrative budget, sponsors, developers, and eligible projects. The total amount of state credit per year has risen from $1.75 million to $8.75 million a year. The taxpayer credit limit has increased accordingly, from $75,000 to $250,000 a year. The carry over period of five years was established in the original bill and has remained the same. The normal tax credit is equal to 50 percent of the value of the support; a high priority credit of 70 percent was established for particularly needy areas in the fourth amendment (1976). The program was and still is administered by the
Department of Community Affairs through the Bureau of Human Affairs. The administrative budget has increased from $50,000 to $125,000 a year. Eligible sponsors were redefined to include "a bank, bank and trust company, trust company, national bank, savings association, mutual savings bank or building and loan association" in the first amendment (1968). Also added in this amendment as an eligible project was "scholarship assistance to an individual who resides in an impoverished area that enables him to (meet educational requirements for known job vacancies) prepare himself for better life opportunites." Insurance companies became eligible sponsors in the second amendment (1969).
The administration of the program was originally assigned to the Department of Community Affairs. They in turn delegated some responsibility and authority to the Bureau of Human Resources. The Department of Community Affairs has six regional offices and one central office. The responsibilities of the regional office are oriented toward project implementation whereas the central office focuses on overall program policy formation. The responsibilities of the regional offices include
1. Assist any non-profit organization or business firm in developing a proposal.
2. Publicize, on a regional level, the regulations of the act and whenever possible, approved projects under the act,
3. Acknowledge receipt of all proposals or letters of intent to submit proposals.
4. Review with local citizens all projects that are submitted from their respective areas.
5. Monitor all projects that have been approved.
6. Examine projects to see if they are part of the total community plan, when such plans are available.
7. Maintain communications with local governments and agencies
in order to coordinate, as best as possible, projects approved under this act with the critical needs of communities.
8. Recommend approval or disapproval of a project to the Secretary of the Department of Community Affairs.
The administrative responsibilities of the central office include:
1. Review projects,
2. Assume responsibility for assigning project numbers as they are received.
3. Recommend to the Secretary of the Department of Community Affairs, project approval or disapproval and the amount of tax credit to be allowed with consideration given to the recommendations submitted by the regional coordinator and the respective regional review systems.
4. Transmit to the regional office and the applicant the secretary's decision to approve or disapprove a project.
5. Submit tax credit approvals to Department of Revenue.
Serve as liason to this Department (C.A.) regarding corporation's tax credit status.
6. Keep accurate records of all proposals as well as applications for tax credit.
The allocation of credit is on a first come basis. There is no regional allocation of credits. The program priorities are set by the Secretary of Community Affairs. These address project types (i.e. housing, day care, unemployment, etc,) rather than geographical considerations. On the other hand, specific geographic areas are identified as high priority targets by the Governor and the Secretary of Community Affairs. Projects in those areas are eligible for 70% credit against the value of all forms of assistance. As mentioned earlier, the inner city was the place where most of the credits were utilized, but now a significant portion of the credits are allocated to depressed suburban and rural areas.
The focus of the program is on the service provided and the impact area, not necessarily on who delivers the service. The main guiding principle is "that a service is being provided for an individual who resides in an impoverished area." The definition of an impacted area is by far the most detailed of any in the Pennsylvania legislation,..
Those basic census units, parts of census units, or combinations of adjacent units which, in comparison to statewide averages, have high incidence of one or more of the following social problems: persistent unemployment or underemployment, dependence upon public assistance, over-crowded, unsanitary, or inadequate housing; crime and delinquency; rejection for selective service; disease disability; infant mortality; school drop-outs or other evidence of low educational attainment or other generally accepted indications of widespread social problems or poverty conditions.
The types of eligible projects are very broad in range. They include: housing rehabilitation, day care centers, elderly programs, handicapped programs, juvenile delinquency programs, performing arts for low-income children, construction of community centers, food and clothing distribution centers, etc. They have funded over 2400 projects over the years. The majority had been in the inner city, but now many projects are being developed in the rural areas. It's almost hard to imagine funding and monitoring so many diverse projects dispersed throughout the state!
The developers include all types of neighborhood development corporations, schools, churches, YWCA, Boy Scouts, Citizens' Crime Council, crisis centers, NHS's, Salvation Army, arts and science centers, etc. This program defined an eligible developer as
any organization performing community services in an impoverished area and holding a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of the Internal Revenue Code.
The sponsor can be
any business entity authorized to do business in the Commonwealth of Pennsylvania and subject to the corporate net income tax act or a bank, bank and trust company, insurance company, trust company, national bank, savings association, mutual savings bank or building and loan association.
The banks, savings and loans, etc. were included as eligible developers in
the first amendment- Subsequent amendments (1969, 1972) addressed the question
as to how they could participate. There seemed to be some concern about these
institutions claiming credit for activities that should be part of normal
business (providing mortgages and insurance to "redlined" districts). So this
concern is reflected in the first amendment:
. .No tax credit shall be granted to any bank, bank and trust company-.-for activities that are part of its normal course of business.
The state wanted to include as much of the business community as possible, but also recognized some of the concerns in trying to do so.
The tax credit may be applied
against any tax which may be due under the corporate net income tax, shares tax, mutual thrift institutions tax, or gross premiums tax.
The tax credit cannot exceed 50% of the total amount invested and the total of credit shall not exceed $250,000 a year. The credit may be carried over for the next five fiscal or calendar years until the full credit has been allowed.
Leonard D. Gilberg, Exec. Director Fashion Apparel Manufacturer's Association
12 South 12th St., Suite 1505 Philadelphia, Penna. 19107 (215)MA7-6358
J. Mark Miller, Exec. Director Diamond Street Community Center 1632 W. Diamond Street Philadelphia, Penna. 19121 (215) 763-7166
George A. Brown, Exec. Director The West Philadelphia Corporation 4025 Chestnut St., Suite 310 Philadelphia, Penna. 19104 (215)386-5757
Stepehn Goff, Exec. Director Annehberg Center for Communication Arts S Sciences
University of Pennsylvania 3680 Walnut Street Philadelphia, Penna. 19104 (215)243-6701
Ms. Alexandra W. Vogel, Exec. Director
Philadelphia Chapter of Young Audiences, Inc.
20th Floor, Anderson Hall
260 South Broad Street
Philadelphia, Penna. 19102
Project No. 81-292-656R
Project Cost: $320,000.00 Tax Credit: $160,000.00
Project No. 81-292-917
Project Cost: $66,600.00 Tax Credit: $33,300.00
Project No. 81-292-918
Project Cost: $35,200.00 Tax Credit: $17,610.00
Project No. 81-292-852R
Project Cost: $14,000.00 Tax Credit: $7,000.00
Project No 81-291-316R
Project Cost: $26,318.00 Tax Credit: $13,159.00
Robert Reifsnyder, Exec. Director Community Development Fund of the United Way of Southeastern Pennsylvania Seven Benjamin Franklin Parkway Philadelphia, Penna. 19103 (215)665-2600
Project No. 81-292-337R
Project Cost: $429,097.00 Tax Credit: $214,550.00
Carver A. Portlock, Exec. Director Project No. 81-292-761R
SmithKline Corporation P. O. Box 7929 1500 Spring Garden Street Philadelphia, Penna. 19101 (215)854-5164
Project Cost: $117,495.00
Tax Credit: $58,748.00
Ms. Sandra A. Beynon, Exec. Director
165 South Franklin Street
Wilkes-Barre, Penna. 18766
Fred Lettieri, Exec. Director
Scranton Lackawanna Human Development Agency
200 Adams Avenue
Scranton, Penna. 18503
Mrs. Dawn W. Kagarise, Exec. Director
Economic Opportunity Cabinet of Schuylkill County
118 East Norwegian Street
Pottsville, Penna. 17901
(Public Relations Development)
Mrs. Dawn W. Kagarise, Exec. Director
Economic Opportunity Cabinet of Schuylkill County
118 East Norwegian Street
Pottsville, Penna. 17901
(Crisis Relief-Energy Conservation)
Wayne D. P. Knox, Exec. Director Neighborhood Housing Services of Reading, Inc. 221 West Buttonwood Street Reading, Penna. 19601 (215)372-8433
Project No. 81-292-687R
Project Cost: $53,523.00
Tax Credit: $26,762.00
Project No. 81-292-941
Project Cost: $5,000.00 Tax Credit: $2,500.00
Project No. 81-292-942
Project Cost: $10,220.00 Tax Credit: $5,110.00
Project No. 81-292-945
Project Cost: $10,500.00 Tax Credit: $5,250.00
Project No. 81-292-777R
Project Cost: $70,903.00 Tax Credit: $35,452.00
Lancaster County Kenneth Klein
Gaudenzia, Incorporated (Lancaster Facility) 39 East School House Lane Philadelphia, Penna. 19144 (215)849-7200
Gaudenzia, Incorporated (Palmyra Facility) 39 East School House Lane Philadelphia, Penna. 19144 (215)849-7200
Jose Del Toro, Jr.
Spanish American Council of York, Inc.
200 East Princess Street York, Penna. 17403 (717)846-9434
Captain Norman Wood, Exec. Director
The Salvation Army
50 East King Street
York, Penna. 17401
Ms. Cindy Groff
Welsh Mountain Medical Center
R. D. #2, Box 350
New Holland, Penna. 17557
Project No. 81-292-919
Project Cost: $72,300.00 Tax Credit: $36,150.00
Project No. 81-292-920
Project Cost: $24,000.00 Tax Credit: $12,000.00
Project No. 81-292-921
Project Cost: $65,600.00 Tax Credit: $32,800.00
Project No. 81-292-878R
Project Cost: $200,000.00 Tax Credit: $100,000.00
Project No. 81-292-857R
Project Cost: $5,000.00 Tax Credit: $2,500.00
Ms. Joanne B. Marshall, Exec. Director Lancaster Neighborhood Health Center 630 Rockland Street Lancaster, Penna. 17602 (717)299-6371
Ms. Tanya Lear, Exec. Director Opera Outreach, Inc.
4108 McIntosh Road Harrisburg, Penna. 17112 (717)657-1676
Project No. 81-292-856R
Project Cost: $35,000.00 Tax Credit: $17,500.00
Project No. 81-292-930
Project Cost: $27,956.50
Tax Credit: $13,978.25
Sylvia II. Schraff, RN, BSN Executive Director
Home Nursing Agency of Blair, Huntingdon and Fulton Counties 201 Chestnut Avenue Altoona, Penna. 16601 (814)946-5411
Mr. Gaius A. Hanawalt, Exec. Director Neighborhood Housing Program, Inc.
201 Reliance Building 1207 12th Avenue Altoona, Penna. 16601 (814)946-0797
Sylvia Y. Schraff, RN, BSN Executive Director
Home Nursing Agency of Blair, Huntingdon and Fulton Counties 201 Chestnut Avenue Altoona, Penna. 16601 (814)946-5411 (SAC Kick-Off)
Mrs. Nancy L. Noll, Exec. Director Centre County Home Health Service 129 Nest Linn Street Beliefonte, Penna. 16823 (814)355-1557
Ms. Judy A. Kelley, Exec. Director Broad Top Area Medical Center, Inc.
P. O. Box 127
Broad Top City, Penna. 16621 (814)635-2916
Charles F. Carver, Jr., Exec. Director
Tableland Community Association
P. O. Box 188
131 North Center Avenue
Somerset, Penna. 15501
Project No. 81-292-796R
Project Cost: $10,000.00 Tax Credit: $5,000.00
Project No. 81-292-601R
Project Cost: $50,000.00 Tax Credit: $25,000.00
Project No. 81-292-944
Project Cost: $25,952.00 Tax Credit: $12,926.00
Project No. 81-292-922
Project Cost: $21,396.00 Tax Credit: $10,698.00
Project No. 81-292-943
Project Cost: $10,000.00 Tax Credit: $5,000.00
Project No. 81-292-39R
Project Cost: $6,000.00 Tax Credit: $3,000.00
Dr. L. Leon Reid, Executive Director Greater Pittsburgh Guild for the Blind 311 Station Stryet Bridgeville, Penna. 15017 (412) 221-2200
Frederick A. Enck, Executive Director United Cerebral Palsy Association of the Pittsburgh District 4638 Centre Avenue Pittsburgh, Penna. 15213 (412)683-7100
Beverly J. Harris, Executive Director Women's Services of Westmoreland County, Inc. 223 N. Maple Avenue Greensburg, Penna. 15601 (412)837-9540
Ms.' Helen Gundlach
Director of Development
Marionette Theatre Arts Council, Inc.
5888h Ellsworth Avenue Pittsburgh, Penna. 15232 (412)361-4835
Margaret E. Clark Riverview Children's Center Box 55, 655 Sylvan Way Verona, Penna. 15147 (412) 828-2585
Raymond E. Webb, Jr., Exec. Director Allegheny East Mental Health/Mental Retardation Center, Inc.
712 South Avenue Wilkinsburgh, Penna. 15221 (412)243-3400
Sanford Bausman, Director United North Side Ministry 501 Avery Street Pittsburgh, Penna. 15212 (412) 321-0242
Project No. 81-292-876R
Project Cost: $100,000.00 Tax Credit: $50,000.00
Project No. 81-292-911
Project Cost: $110,834.00 Tax Credit: $55,417.00
Project No. 81-292-812R
Project Cost:, $22,875.10 Tax Credit: $11,396.55
Project No. 81-292-528R
Project Cost: $23,562.00 Tax Credit: $11,781.00
Project No. 81-292-877R
Project Cost: $50,000.00 Tax Credit: $25,000.00
Project No. 81-292-904
Project Cost: $150,000.00 Tax Credit: $75,000.00
Project No. 81-292-927
Project Cost: $6,690.65
Tax Credit: $3,345.32
Sheila Ardery, Executive Director Hospitality House for Women, Inc. 240 East Tenth Street Erie, Pennsylvania 16501 (814)454-8161
Patrick J. Farrone, Exec. Director George Junior Republic in Pennsylvania Box 471
Grove City, Penna. 16127 (412)458-9330
Mary Beth Kennedy, Exec. Director Community Country Day School 5800 Zuck Road Erie, Penna. 16506 (814) 455-6155
Ms. Joan L. Martin, Exec. Director Erie County Rape Crisis Center, Inc. 4518 Peach Street Erie, Penna. 16509 (814)456-1001
Mr. Harry C. Culp, Exec. Director
Oil City YMCA
Seven Petroleum Street
Oil City, Penna. 16301
Mr. Timothy J. Finegan, Exec. Director Erie Independence House, Inc.
956 West Second Street Erie, Pennsylvania 16507 (814)459-6161
Project No. 81-292-735R
Project Cost: $23,584.00 Tax Credit: $11,792.00
Project No. 81-292-727R
Project Cost: $68,750.00 Tax Credit: $34,375.00
Project No. 81-292-703R
Project Cost: $10,000.00 Tax Credit: $5,000.00
Project No. 81-292-839R
Project Cost: $10,000.00 Tax Credit: $5,000.00
Project No. 81-292-890
Project Cost: $86,100.00 Tax Credit: $43,050.00
Project No. 81-292-700R
Project Cost: $39,151.00 Tax Credit: $19,575.50
The Neighborhood Assistance Credit Program was passed by the Indiana State Legislature in 1976, and became operational in April, 1977?5 The program was seen, by the state, to be a vehicle into the community on a small scale.
It allowed the state to enter an impacted area and generate other activities which would contribute to the improvement of the area, without having to develop a state-wide program. The hope was that people would take the initiative to utilize the credit program in solving local problems. The program funds were to be used as seed money to generate activities and partnerships among neighborhood organizations, business and industry, and the city government.
The administrative entity is the Department of Commerce, and the program was run by the Office of Minority Business Enterprises. There were some administrative changes and reshuffling recently. The program is now located in the Department of Business and Financial Services (BFS). The administrative budget rose from $0 to $45,000 (1980-81). The total state available tax credit is $1,000,000 a year. The credit limit per taxpayer is $25,000 a year. A tax credit of 50% is applied to all support. The tax credit must be fully utilized in the year it was allocated.
The administrative structure is comprised of the Department of Commerce, the Department of Revenue, the Department of Business and Financial Services, and the Proposal Review Committee.
The Director of the Department of Commerce, after consultation with the Director of the Community Services Administration and the Commissioner of the Department of Revenue, is authorized to promulgate rules and regulations, for the approval and disapproval of proposals, to set annual program priorities, and to exercise administrative authority over all aspects of the neighborhood assistance credit program.
The Department of Business and Financial Services is authorized to: publicize rules and regulations, approve projects under the program, review proposals to ensure conformity with program regulations, examine projects to determine adherence to other community plans, keep records, notify the Department of Revenue of approved projects, and monitor all approved projects. The Department of Business and Financial Services is mainly responsible for the day to day functioning of the program, while the Department of Commerce is more concerned with yearly priorities, program scope, and other matters which affect the overall workings of the program.
The Proposal Review Committee consists of a representative from the Office of Community Services Administration and six others which are appointed by the Director of Commerce. They are authorized to: develop and recommend annual program priorities, recommend programs, and determine the eligibility of the organization conducting the project. The chairperson is appointed by the Director of Commerce.
Now, onto some definitions so the thrust of the program is clear. The
partners in the program are the neighborhood organization (developer) and business
and industry (sponsor). The developer
means any organization performing community services in an economically disadvantaged area: which organization has been recognized by the Internal Revenue Service, U.S. Department of Treasury, as exempt from income taxation under the provisions of the Internal Revenue Code and has been recognized by the Indiana Department of Revenue as exempt from income taxation under IC 6-2-1-7.
This term includes, but is not limited to, not-for-profit corporations.
This is a broad definition that includes a wide range of developers: schools,
child care centers, Community Action Program, Neighborhood Housing Services,
Economic Development Authority, citizens' organizations, etc. Business may
qualify for credit by expanding or starting up in a depressed area. The value
of the credit is equal to 50% of the costs that relate to increased employment
or job training (if a retailer spent $30,000 to increase the square footage of the store and as a result hired two more people and is training one, the eligible costs are the two additional salaries and cost of training, say, approximately $25,000. The owner may apply the $25,000 but not the $30,000 which was for materials and additional property tax. The owner may apply for $12,000 worth or credit.) Traditional service organizations such as YWCA, Red Cross, and Boy Scouts are eligible if the planned project directly relates to residents of impacted areas. (The YWCA may "donate" a certain number of free memberships to residents in return for being eligible to receive funds for the construction of a new facility in a depressed area.)
The sponsor may be "any business entity authorized to do business in the State of Indiana and subject to the gross, adjusted gross, or supplemental income tax." This broad definition ranges from the small mom and pop deli to the largest corporation in the state. It is clear that they wish or desire the entire business community to participate at some level.
The types of support include: "Financial assistance, labor, material, and technical advice to aid in the physical or economic improvement of any part or all of an economically disadvantaged area." The focus is on the physical and economic improvement in a depressed area, not really the actual support. Even though real estate and equipment aren't specifically mentioned, I'm sure they would qualify* For instance, if some developer "donated" a lot or a house for a project, I don't think anyone would object.
Projects that have been funded include: facility construction of a child care center, construction of a solar greenhouse, scholarships, operating expenses for a community service organization, a loan fund for housing rehabilitation to high risk borrowers, and building/storefront improvements to attract
new business. The amount of assistance requested for a project ranged from $1,600 to $210,000. The administrative policy is to fund new or expanding projects, and avoid allocating credits to projects that are terminating because of a lack of financial resources.
There are two basic methods to determine the eligibility of the area in which the project is to be located. The first method is a comparison of the per capita income of the project area against the state average. The ratio must be less than one. The second method is a comparison of those at the poverty level in the project locale against the state level. Again, the ratio must be less than one. There is a third method available if the information required for the above two methods is not accessible. The organization developing or sponsoring the proposed project may present documentation such as as neighborhood survey, or that they would qualify under the Federal Guidelines for Housing and Urban Development Action Grant monies or Community Development Block Grant monies.
The administrative agency will help an organization prepare a neighborhood economic survey. But next year, due to staff reshuffling, they won't be able to provide this service. Another service provided by the administrative agency through the Indiana Management Assistance Program, to non-profit organizations and business, is technical assistance to develop projects. This is a pool of technical services which includes: accounting, management, architectural/design, and banking firms. They will provide technical assistance to an organization if it cannot find help from other state agencies or non-profit organizations. This is project-related technical assistance; it cannot be used to actually organize or develop the group. This must already be done.
The allocation of credits is on a first-come, first-serve basis within the priority guidelines developed by the Proposal Review Committee. There has never been a district or regional based distribution of credits, but this possibility exists in the near future. It would make the program more accessible and relevant to the more rural areas. It is not being considered because the inner cities are utilizing all the credits. This couldn't be true since only 50-60% of the total credits are utilized each year.
There was a lack of response to this program for the first two years.
Only 10-20% of the total state credit ($1,000,000) was claimed. Two reasons were cited:
1) There was very limited outreach and information dissemination, due to a very small administrative staff (one part-time); and
2) The economic climate was poor a tax credit was not a high priority concern for business firms.
In July, 1980, the staff increased from one part-time employee to three full time positions. In the first eight months of the fiscal year 1980-81, over 500,000 (50%) of the tax credit has been approved. (I guess business is concerned about tax credits, also.) There has been a significant increase of outreach focused on local neighborhood organizations and local government. They must go out and educate the business community as to the benefits of the neighborhood assistance credit program and as to the merits of their specific project.,
NEIGHBORHOOD AS-.SIAUU rKuuiw
PROJECT TITLE ORGANIZATION/AGENCY PURPOSE EY AM0UN1 or COM -BUTTON REQUEM. $33,107.42
$urmer Travel, Education, and Elementary Magazine Harmony Schools, Bloomington IN. Lease school bus, implement summer program, and initiate journalism program 78/79
Columbus Child Care Center, Inc. Columbus Child Care Center Inc. Columbus IN. Facility Construction 7C/79 $76,000.00
Solar Greenhouse Project ISI1 Community Action Program of Evansvi11 IN. Construction c 78/79 $1,631.00
Scholarship Program Harmony Schools, Bloomington, IN. Provide 33 scholarships to economically disadvan taged students 79/80 $44 ,000.00
Community Centers for the Handicapped Child-Adult Resource Services, Inc. Rockville, IN. Facility Construction 79/80 80/81 $65,000.00
Community Services Monroe County Community Action Program Monroe, IN. Operating Expenses 79/80 $24,502.00
*<;gh-Risk Revolving Loan Fund Neighborhood Housing Services, Inc. South Bend, IN. Loan Fund for Housing Rehabilitation to High Risk Borrowers 79/80 $30,000.00
PROJECT TITLE 1 ORGANIZATION/AGENCY PURPOSE FY amount of corn p.: BUTTON D-0HrsTÂ£'
Indiana Management Assistant Program a Indiana Economic Development Authority Technical assistance to small businesses and local development 80/81 $210,000.00
Re WjTi//2afa '0'S LSih'zessS fims'f t/j SriAy ///j /// f]c' ht/s/tseJS tG ir'*., / sete* ~ fre~r J>oC-'a/Ses y/csj 735 &
Neighborhood Assistance Legislation has twice been introduced to the Colorado State Legislature. Both times it failed. It was first introduced in 1979 as the Community Assistance Tax Credit Act. The bill was sponsored by a Democratic representative and a Republican senator. There was not a strong enough lobbying effort to push the bill through. Neighborhood assistance legislation was again introduced in 1980. The bill was titled a Business Tax Credit for Investment in Community Improvement Projects. This time the bill was sponsored by three Democrats: two representatives and one senator. It was a particularly difficult session to convince the state to sponsor a new program and allocate a half million dollars for it. There was uncertainty as to the degree to which federal budget cuts would affect state programs. The idea to encourage business to participate in community improvement projects was very good, but the state decided it could not afford to fund such an idea at this time. The tax bill was also sponsored by three Democrats in a Republican dominated legislature, in a year in which "Republicans were putting together their own tax packages. The neighborhood assistance bill was not included in the package. It never made it out of committee. But, there is a renewed effort to get the bill placed in the "governor's call" session. The 1980 bill is the basis for the following material..
The Colorado bill could become operational January 1, 1982. The bill creates a tax credit for business, not to exceed fifty percent of eligible contributors to community improvement projects operated by a non profit organization or by a unit of local government. The program would be administered by
the Department of Local Affairs. The total state tax credit limit would be $500,000. The individual taxpayer limit would be $30,000. The credit may be deferred over a five year period.
The tax credits are to be equally distributed for community improvement projects in the thirteen management and planning regions of the state. Given the $500,000 state credit limit, this translates to a maximum of $38,461 credits for each region. Also given the fact that a firm may apply for $300,000 credit, it's possible that 75% of a region's allocation could be utilized by one firm and one project. This allocation method, although structured for maximum dispersal and impact, has been severely limited in this attempt by the financial guidelines.
Each project must be based on a written agreement between the taxpayer
and a unit of local government. The agreement must specify the need for the
project, as well as its nature, value, and purpose. The agreement is then sent to the Department of Local Affairs for approval or disapproval. The criterion for acceptance is very general. It is based on the need for the project in the given community and the ability of the business and the non-profit organization to develop the project.
The program is similar to other states in most aspects pertaining to eligible projects, donors and recipients. There are two major differences: business is not allowed to develop a project (only sponsor) and the unit of local government is eligible as a recipient. The prime recipient, a non profit
organization, is an established local community service organization holding a
federal tax exempt status. The program is consistent with other state programs in most areas.
LDO NO. 81 1030/1
First Regular Session Fifty-third General Assembly
STATE OF COLORADO
HOUSE BILL NO.
I 592 Finance
BY REPRESENTATIVES Pena and Castro; also SENATOR Gallagher.
A BILL FOR AN ACT
1 CONCERNING A BUSINESS TAX CREDIT FOR INVESTMENT IN COMMUNITY
2 IMPROVEMENT PROJECTS.
(Note: This summary applies to this bi11 as introduced and does not necessarily reflect any amendments which may be subsequently adopted.)
Allows business corporations a credit against income tax for a portion of their contributions to finance community improvement projects undertaken by nonprofit organizations or units of local government. Proposals for projects to aid a community are to be evaluated by the department of local affairs before being certified as eligible for credit. Credits are to be allocated equally among project proposals from the thirteen state planning regions.
3 Be i_t enacted by the General Assembly of the State of Colorado:
4 SECTION 1. Part 5 of article 22 of title 39, as amended, is
5 amended BY THE ADDITION OF A NEW SECTION to read:
6 39-22-513. Tax credit for community improvement. (1) For
7 the income tax years commencing on or after January 1, 1982, but
8 before January 1, 1984, there shall be allowed to a business
9 firm, as a credit against the taxes imposed by this article, an
10 amount not to exceed fifty percent of eligible contributions to
Capital letters indicate new material to be added to existing statute. Dashes through the words indicate deletions from existing statute.
community improvement projects operated by a nonprofit organization or by a unit of local government.
(2) To qualify as an eligible contribution for credit, the following requirements must be met:
(a) Each contribution shall be based on a written agreement between the taxpayer and a unit of local government specifying the need for such contribution, its nature, value, and purpose.
(b) The agreement shall be submitted to the department of local affairs by the unit of local government for approval. The department of local affairs shall apply the following criteria:
(I) Equal distribution of the credits for community improvement projects in the thirteen management and planning regions of the state, as set forth in the governor's executive order dated November 13, 1973;
(II) The need for the community improvement project in the community or area to be aided; and
(III) The ability of the business firm and the nonprofit organization to provide the program called for in the proposal.
(c) The agreement shall be certified as eligible by the executive director of the department of local affairs to the executive director of the department of revenue, the unit of local government, and the taxpayer. The total of credits allowed by this section shall not exceed five hundred thousand dollars to be distributed equally among, the state's thirteen planning regions. The department of local affairs shall not approve credit to any one business firm in any fiscal year of more than
thirty thousand dollars.
(d) The agreement between the business firm and the unit of
local government shall be submitted before ___________________ and
approved by the department of local affairs no later than
____________. A complete list of approved projects shall be sent
by the department of local affairs to the department of revenue before ____________.
(3) As used in this section:
(a) "Business firm" means any business entity which is authorized to do business in this state and which is subject to taxation under part 3 of this article or has a Subchapter S election in effect.
(b) "Community improvement project" means a plan to provide:
(I) Financial assistance, labor, materials, or technical advice to encourage the physical or social improvement of all or part of an area or neighborhood; or
(II) Any type of assistance, counselling, job training, advice, emergency aid, crime prevention action, or medical care furnished to individuals or groups who are economically di sadvantaged.
(d) "Nonprofit organization" means any established local or neighborhood organization performing community services and holding a tax-exempt status from the federal government.
(e) "Unit of local government" means a county, city and county, city, or town.
(4) Any taxpayer allowed a credit pursuant to this section may defer such credit over a five-year period commencing with the year in which the community improvement project is in operation.
(5) No credit shall be allowed for any activities undertaken as part of and in the course of a business firm's usual business activities.
(6) Any contribution made to a nonprofit organization and claimed as a credit under this section shall not be allowed as a deduction under any other provision of this article.
(7) In the case of a taxpayer who is a Subchapter S corporation, the credit allowed by this section shall be allowed against the income tax liabilities of its shareholders pursuant to part 1 of this article.
SECTION 2. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.
COMMUNITY ASSISTANCE PROGRAM Sample Computation
/? 7 f
Net Income Before Contribution and
Colorado Tax $ 220,000.00 $ 220,000.00 $ 220,000.00
Contribution Hade none 10.000.00 10,000.00
Federal Income before Colorado tax 220,000.00 210,000.00 210,000.00
Colorado Tax @ 57. 31.000.00 10,500.00 10,500.00
Federal Income after Colorado tax 209,000.00 199,500.00 199,500.00
Neighborhood Assistance tax credit 507. -0- -0- 5.000.00
Line 28 Fed. 1120 Income Tax Form 209,000.00 199.500.00 204.500.00
Fed. Tax 177. x 25,000 4,250.00 4,250.00 4,250.00
201 x 25,000 5,000.00 5,000.00 5,000.00
307. x 25,000 7,500.00 7,500.00 7,500.00
407. x 25,000 10,000.00 10,000.00 10,000.00
467. xl09,000 50,140.00
* 467. x 99,500 45,770.00
467. xl04,500 48,070.00
TOTAL FED. TAX $ 76,890.00 S 72,520.00 $ 74,820.00
Contribution none 10,000.00 10,000.00
Fed. Taxes 76,890.00 72,520.00 74,820.00
Colorado Tax @ 57. 11,000.00 10,500.00 5,500.00 U)
TOTAL CASH REQUIRED $ 87,890.00 $ <|3,020.00 $ 90,320.00
Actual Cash Required to Contribute
$ 10,000.00 none $ 4,870.00 $ 2,430.00
(1) Colorado tax on line (5) is decreased by the 507. Commun i ty Ass I stance Tax credit allowed on line (7).
* A tax credit refers to the amount a business may subtract directly from state assessed taxes. A deduction refers to the amount subtracted from the gross corporate income.
The Missouri sample computation (see Background page ) illustrates that a $10,000 contribution to a tax credit program will save the business 47% over a similar contribution to a tax deduction program.
Joanne Fox and J. William Fredrickson, "Stimulating Joint Urban Ventures: Community Organizations and Organized Philanthropy" (Chicago: Trust Inc., 1980), p. 14.
The bill was first introduced as the community assistance tax credit act in 1979. The bill was introduced by Representative Richard Castro (D) and Senator Joel Hofley (R). The bill was again introduced in 1981 as An Act Concerning a Business Tax Credit for Investment in Community Improvement Projects. The bill was sponsored by Representa-tives Federico Pena (D) and Richard Castro and Senator Dennis Gallagher. It also failed to pass the second time.
Telephone interview with David Turner, Department of Economic Development, Lansing, Michigan, February 1981.
Fred N. Abrams, "Pennsulvania Neighborhood Assistance Act" Pennsylvania Department of Community Affairs, Harrisburg, Pennsylvania, p. 1.
^ Telephone interview with Dave Johnson, Neighborhood Program Manager, Missouri Division of Economic and Community Development, Jefferson City, Missouri, Spring 1981.
^ This refers to the case in Colorado.
E.C. Walker and Marty Stangl, "Missouri's Neighborhood Assistance Program," Missouri Division of Community Development, Jefferson City, Missouri, 1977, p. 5.
Illinois Legislature Draftint Office, Neighborhood "Investment Tax Incentive Act, Provisions of Proposed Legislation" January 1981, p. 1.
^ Pennsylvania State Legislature, Pennsylvania Neighborhood Assistance Act, Act 292 of 1967, Section 2 (3).
Missouri Division of Economic and Community Development, "Neighborhood Assistance Program", Jefferson City, Missouri, 1981, p. 4.
Wisconsin Department of Development, Community Economic Development Program, "A Community-Based Economic Finance Institution", Madison, Wisconsin, 1981, p. 5.
Missouri Division of Economic and Community Development, "Neighborhood Assistance Act", Jefferson City, Missouri, 1981, p. 3.
^ Information provided by the Indiana Department of Business and Financial Services, Indianapolis, Indiana, Spring, 1981.
Pennsylvania Department of Community Affairs, "Neighborhood Assistance Act Approved Projects, Supplemental List", Program Year July 1, 1980-June 30, 1981, p. 2.
^ Florida State Statutes, Chapter 80-247, Laws of Florida.
^ Colorado State Legislative Drafting Office "A Bill for an Act Concerning a Business Tax Credit for Investment in Community Improvement Projects" 1981, Section 2 (b) (I).
III. ANALYSIS 1 ft
The information on Control Data Corporation and City Ventures, Inc. was based on a public relations packet which included news clippings, magazine articles, and company fact sheets. This was supplied by Control Data Corporation.
Robert M. Price, "Remarks on the City Venture Corporation", Philadelphia City Hall, Pennsylvania, April 11, 1980, p. 1-2.
The information on the TPP is first hand. The author had been working on the TPP and the map simultaneously.
Susan Scott, Project Director, Business Roles in Economic Development,
(New York: Center for Public Resources, 1981), p. 120-125.
Fred N. Abrams, "Pennsylvania Neighborhood Assistance Act", Pennsylvania Department of Community Affairs, Harrisburg, Pennsylvania, p. 2.
Telephone interview with Donald Ballard, Department of Commerce, Office of Minority Business Enterprises, Indianapolis, Indiana, February 1981.
E.C. Walker and Marty Stangl, "Missouri's Neighborhood Assistance Program" Missouri Division of Community Development, Jefferson City, Missouri,
1977, p. 5-6.
Telephone interview with Arzolla Williams, Neighborhood Assistance Program Director, Department of Business and Financial Services, Indianapolis, Indianapolis, July 1981.
D Telephone interview with C. Ramons, Department of Community Affairs, Bureau of Human Resources, Harrisburg, Pennsylvania, July 1981.
Meeting July 15, 1981; the purpose of the meeting was to develop a preliminary strategy to get the map passed in the next legislative session. The information on business participation in the formal charitable tax deduction program was supplied by Betty Proctor,
Jefferson County Department of Social Services, Jefferson County, Colorado.
Colorado Representative Richard Castro's Neighborhood Assistance File (Personal letter)
Robert Cassidy, Livable Cities: A Grass Roots Guide to Rebuilding Urban America, (New York: Holt, Rinehart and Winston, 1980), p. 71.
E.C. Walker and Marty Stangl, "Missouri's Neighborhood Assistance Program, "Missouri Division of Community Development, Jefferson City, Missouri 1977, p. 2
Colorado Representative Richard Castro's Neighborhood Assistance File (Personal letter)
E.C. Walker and Marty Stangl, "Missouri's Neighborhood Assistance Program", Missouri Division of Community Development, Jefferson City, Missouri, 1977, p. 2
Constance Beaumont, ed., Urban Conservation Report, Volume V, Number 10, Washington, D.C., May 1981, p. 4
VI. CASE STUDIES
^ All the information for the Pennsylvania Cast Study is based on the five acts which constitute the law, (Act 292 of 1967, Act 231 of 1968, Act 81 of 1969, Act 75 of 1972 and Act 174 of 1976) and the Guidelines to the Neighborhood Assistance Program, Pennsylvania Department of Community Affairs.
All the information for the Indiana Case Study was based on telephone interviews with Donald Ballard and Arzolla Williams and on the Indiana Neighborhood Assistance Credit Program Regulations.
Beaumont, Constance, ed., Urban Conservation Report, Washington, D.C., Preservation Reports, Inc. 1981, Volume V, Number 10
Cassidy, Robert. Livable Cities: A Grass Roots Guide to Rebuilding Urban America. New York: Holt, Rinehart and Winston, 1980.
Council for Northeast Economic Action. Cities in the Middle: The Way Back to Prosperity/A Conference Summary of Proceedings. Boston, Massachusetts,
Council for Northeast Economic Action, Local Economic Development: Public Leveraging of Private Capital. Boston, Massachusetts, 1978.
Davidson, Steven and Pryde, Paul. "Tax Policy, New and Small Enterprises and Economic Development." Washington, D.C.: National Rural Center, 1981,
Fox, Joanne and Frederickson, William J. "Stimulating Joint Urban Ventures: Community Organizations and Organized Philanthropy." Chicago: Chicago Trust, Inc., 1980.
Kotler, Neil G. Neighborhood Economic Enterprises. Washington, D.C.: Charles F. Kettering Foundation, 1978.
Peirce, Neal R., Hagstrom, Jerry, and Steinback, Carol. Democratizing the Development Process. Washington, D.C.: The Council of State Planning Agencies, 1979.
Roberts, Benson F. Community Development Policy: Potential for Partnership. Washington, D.C.: National Congress for Community Economic Development,
Scott, Susan. Business Roles in Economic Development: Executive Summary.
New York: Center for Public Resources, 1981.
Scott, Susan. Business Roles in Economic Development: Model Summaries. New York: Center for Public Resources, 1981.
Telephone interviews with Fred Abrams, Neighborhood Assistance Program Coordinator, Department of Community Affairs, Bureau of Human Resources, Harrisburg, Pennsylvania, January 1981 through July 1981.
Telephone interviews with Sharon Archibald, Vice President, Union Sarah Economic Development Corporation, St. Louis, Missouri. February 1981 through March 1981.
Telephone interviews with Donald Ballard, Department of Commerce, Office of Minority Business Enterprises, Indianapolis, Indiana, January 1981 through June 1981.
Telephone interviews with Louis G. Fortis, Department of Development,
Community Economic Development Program, Madison, Wisconsin, January 1981 through May 1981.
Telephone interviews with Joanne Fox, Co-Director, Trust, Inc., Chicago, Illinois, January 1981 through June 1981.
Telephone interviews with Dave Johnson, Neighborhood Programs Manager,
Division of Economic and Community Development, Jefferson City, Missouri, January 1981 through June 1981.
Telephone interviews with Early Johnson, Department of Veteran and Community Affaris, Bureau of Housing and Community Development, Tallahassee, Florida, January 1981 through May 1981.
Telephone interview with David Turner, Department of Economic Development, Lansing, Michigan, February, 1981.
Telephone interviews with Arzella Williams, Neighborhood Assistance Program Director, Department of Business and Financial Services, Indianapolis, Indiana, July 1981.
Telephone interviews with C. Ramons, Department of Community Affairs, Bureau of Human Resources, Harrisburg, Pennsylvania, June/July, 1981
State Legislation, Pamphlets, and Brochures
House Bill 1592 of 1981 House Bill 1418 of 1979
Neighborhood Assistance Program File; Representative Richard Castro
House Bill 1871 of 1980
House Bill 1869 of 1980
House Bill 1870 of 1980
Florida Department of Revenue, "Businesses: How to receive tax credits for new jobs and/or tax credits for new, expanded, or rebuilt businesses." Tallahassee, Florida 1981.
Rules of the Department of Veteran and Community Affairs, Division of Local Resource Management, Chapter 9-B-15, "Rule for the Approval of Tax Credit Areas" and Chapter 9B-17, "Procedures Relating to the Community Improvement Act of 1980."
Illinois Legislative Drafting Office, Neighborhood Investment Tax Incentive Act: Provisions of Proposed Legislation, January 1981.
Trust Inc., "Neighborhood Investment Tax Incentive Act", Chicago, Illinois 1981.
Indiana Department of Commerce, Neighborhodo Assistance Program: Proposal Format, Indianapolis, Indiana, 1980.
Department of Consumer Affairs, Regulation and Licensing, Title 4, Division 8S, Chapter 1 and 2, Jefferson City, Missouri, 1980.
Division of Community and Economic Development, "Missouri's Neighborhood Assistance Act", "Neighborhood Assistance Program", "Neighborhood Assistance Act: A Guide for the Business and Community", "An Incentive for Business-Community Partnerships", Jefferson City, Missouri 1981.
Missouri Senate Bill 375 of 1978; Neighborhood Assistance Act.
Abrams, Fred N., "Pennsylvania Neighborhood Assistance Act: First in Nation" Department of Community Affairs, Harrisburg, Pennsylvania, 1980.
Legislative Act 292 of 1967 Legislative Act 231 of 1968 Legislative Act 81 of 1969 Legislative Act 75 of 1972 Legislative Act 174 of 1976
Wisconsin Department of Development, Community Economic Development Program "A Community-Based Economic Development Finance Institution," Madison, Wisconsin, 1971.
Center for Public Resources
680 5th Avenue
New York, NY 10019
Colorado Department of Local Affairs
Division of Commerce and Development
Community and Educational Council of State Planning Agencies 444 N. Capitol Street, NW Suite 204
Washington, D.C. 20001 (202) 624-5386
Conference on Alternative State and Local Public Policies 1901 Q Street, NW Washington, D.C. 20009 (202) 387-6030
Florida Department of Veteran and Community Affairs Bureau of Housing and Community Development
2571 Executive Centre Circle, East Tallahassee, Florida 32301 (904) 488-1536 Early Johnson
Indiana Department of Business and Financial Services 440 N. Meridian Street Indianapolis, Indiana 46204 Arzella Williams
Missouri Division of Economic and Community Development P.0. Box 118
Jefferson City, Missouri 65101 (314) 751-4849 Dave Johnson
National Association of Neighborhoods Washington D.C.
c/o John Conyers
2313 Rayburn Office Building
Washington, D.C. 20515
National Conference of State Legislatures 1125 17th Street (1st floor)
Denver, CO 623-6600
National Congress for Community Economic Development Research and Lobby 1029 Vermont Avenue, NW Washington, D.C. 20005 (202)659-8411
Neighborhood Organization Research Group (N0RG)
814 E. 3rd Avenue Bloomington, IN 47405
National Self Help Resource Center 2000 South Street, NW Washington, D.C.
National Rural Center and Opportunity Funding Corporation 1828 L Street, N.W.
Washington, D.C. 20036 (202) 331-0258
Office of Neighborhood Self-Help Development Washington, D.C.
Pennsylvania Department of Community Affairs
Bureau of Human Resources 376 Forum Building Harrisburg, PA 17120 (717) 787-4179
Fred Abrams, Program Coordinator
53 W. Jackson, Room 235 Chicago, IL 60604 (312)922-7950 Joanne Fox
Union-Sarah Economic Development Corporation 4915 Delmar Boulevard P.0. Box 4797 St. Louis, MO 63108 361-1331
Wisconsin Department of Development Community Economic Development Program
123 W. Washington Avenue Madison, WI 53702 (608) 266-7218 Louis G. Fortis
NEIGHBORHOOD ASSISTANCE PROGRAM: An Evaluation
An Abstract of a Thesis submitted by Michael Landy in partial fulfillment of the Requirements for the Degree of Masters of Urban and Regional Planning/ Community Development, College of Environmental Design, University of Colorado at Denver August 1981
The thesis is about the Neighborhood Assistance Program (NAP). The Nap encourages maximum local involvement and control in solving local problems by utilizing indigenous resources and minimizing government intervention. The NAP, specifically, provides a state tax credit incentive to business and industry which sponsor or contribute to projects aimed at improving the quality of life for residents of rural communities and urban neighborhoods. The focus of this research is on the urban application of the program. It is an innovative attempt to address neighborhood problems through local means.
There is little written material on this relatively new and obscure program. An extensive research effort was undertaken to obtain information about the NAP. This involved first contacting local resources for "lead" information. MAny of these sources cited national organizations and agencies as references. A few local sources identified states which had adopted the program. The national organizations were focused on in order to identify all states utilizing the NAP. These sources were useful for idenfication of existing and proposed neighborhood assistance programs and for suggesting related written material. In all, seven states were identifed: Pennsylvania, Indiana, Missouri, Florida, Illinois, Wisconsin, and Colorado. These states were contacted and a three to four month correspondence period ensued. This was comprised mostly of telephone interviews with directors of the program (in states where the NAP existed) and with those responsible for drafting this legislation in states where the NAP is in the proposal stage. The method was lengthy and costly, but facilitated efficient access.
The purpose of this thesis is to test two hypotheses:
1) The NAP is an effective incentive for business participation.
2) The NAP is an effective tool for neighborhood improvement in impoverished urban areas.
These hypotheses reflect the two major goals of the program: 1) business participation (in) 2) neighborhood improvement.
The ascertainment of whether the NAP is an effective incentive for business participation is based on the review of these areas: 1) the NAP as a competitive incentive, 2) the business role, and 3) the present level of business participation. The evaluation of the NAP as an effective tool for neighborhood improvement was based on two areas: 1) the development of neighborhood organizations and 2) the improvement of impoverished communities.
The study of these areas will lay the basis for conclusions and recommendations.
It was concluded that the NAP was ineffective as an incentive for neighborhood participation, and it was inconclusive whether the NAP is an effective tool for neighborhood improvement. The major reason NAP was ineffective was because the fiscal incentive was not competitive with alternative incentives. It could not be concluded whether the NAP was effective at improving impoverished neighborhoods because the program is relatively new and the program hasn't been consistently and systematically documented. The structure of the program is conducive to attaining the stated goals, but the mechanics and scope need to be refined. Recommendations concerning the major drawbacks were developed.
The recommendations that addressed business participation focused on expanding the use of the tax credit into investment opportunities in impoverished areas. An increase in outreach and education is required to publicize the program. The effectiveness of the NAP as a neighborhood improvement tool would be enhanced if, neighborhood based organizations were the primary recipient of the program and technical assistance was provided to facilitate development of projects. A formal communication process should be established between the state administrative agency and the participants. This ongoing communication could result in better documentation of project results.
TABLE OF CONTENTS
Relevancy of Topic Methodology Organization of Report
Goals and Objectives
How the Program Works: Legislation and Administration
Types of Support
Types of Projects
Areas of Impact
Allocation of Credit
Does the NAP Directly Involve Business and Industry?
Does the NAP Encourage Business and Industry to Assist Neighborhood Organizations?
Does the NAP Improve Impoverished Communities?
The NAP as a Business Incentive
The NAP as an Effective Tool for Neighborhood Improvement
VI. CASE STUDIES