MANAGING FEDERALISM: LESSONS FROM THE ECONOMIC ADJUSTMENT PROGRAM
Laura A. Reese, Professor College of Urban, Labor and Metropolitan Affairs Urban Planning Program Wayne State University Detroit, MI 48202 Laura.firstname.lastname@example.org
Raymond A. Rosenfeld, Professor Department of Political Science Eastern Michigan University Ypsilanti, MI 48197 Raymond.Rosenfeld@emich.edu
This paper has been prepared for presentation at the annual meeting of the Southern Political Science Association, January 2004, New Orleans, LA. This research has been funded by the United States Department of Commerce Project No. 99-07-13819. The authors would like to acknowledge the efforts of the other members of the evaluation research team that participated in the larger project, David Fasenfest and Patricia Case, Center for Urban Studies, Wayne State University.
MANAGING FEDERALISM: LESSONS FROM THE ECONOMIC ADJUSTMENT PROGRAM Changes in the economic, political, and social framework of governance have had concomitant effects on the nature of national, state, and local relations (Watts, 1996). From the layer cake to the marble cake to the picket fence, and from “federalism” to “intergovernmental relations” to “intergovernmental management,” issues related to managing the federal system have been central to scholars in a host of public policy fields. Initial intergovernmental management models emphasizing top-down (executive branch control) or donor-recipient relations (shared program administration) have given way in many cases to jurisdiction-based or network approaches depending on the federal program and policy arena (Agranoff and McGuire, 2001). These latter approaches provide for more discretion and innovation on the part of subnational units and hence for a more interactive and collaborative intergovernmental dynamic. Yet, at the same time, other scholars have found increased federal level regulations, unidirectional federal-state power relationships, and an “accretion” of power to the national level (Conlan, 1991; Zimmerman, 1992). Economic development has been identified as one of the policy areas where state and local governments are becoming increasingly creative and collaborative in their relationships with federal funders (Agranoff and McGuire, 1998, 2001). This paper provides an assessment of intergovernmental management models using the Economic Development Administration’s Economic Adjustment Program (EAP) as a case. EAP grants go directly to a variety of state and sub-state recipients and are directed at mitigating economic “disasters.” Program areas include funding for defense readjustments (typically military base closures), major plant shut-downs, economic stress resulting from natural disasters such as floods or hurricanes, and other types of
3 “sudden and severe” economic shocks. Program funds are thus meant to provide emergency rather than on-going assistance. Unlike many federal programs, EAP has a strong regional component, with each of the six EDA regional offices maintaining significant discretion in project development and grant allocation. The findings of this study are based on 18 case studies representative of all EAP grant sizes, types, and regions and a survey of EDA regional representatives as part of an evaluation of EAP grants funded by the Department of Commerce and conducted during 2002. It presents the lessons learned about managing federalism from an assessment of this locally implemented, regionally decentralized, federal economic development program. The following specific questions are addressed: • • • What model or models of intergovernmental management best capture the operation of the EAP? What are the impacts of regional decentralization in the management of the EAP program? Are regionally decentralized federal programs better able to address local needs? To what extent do federal goals and directives drive or shape local solutions to economic stress?
LITERATURE REVIEW Models of Intergovernmental Management Agranoff and McGuire (2001) provide a useful delineation of four models of intergovernmental management: top-down, donor-recipient, jurisdiction-based, and network. These models have been used to portray intergovernmental relationships at various historical points in time or for different policy areas or grant programs. As prototypes, they provide contrasting paradigms for intergovernmental relations in operation and serve as the organizational framework for the analysis of the EAP to follow.
4 The top-down model of intergovernmental management describes a system where federal goals, priorities, and regulations are primary and a certain level of hostility may exist between levels of government (Sundquist and Davis, 1969). It thus represents the classic “command and control” structure of federalism where the local focus is on “transactions relating to meeting program intent and expectation-that is, trying to fit programs into standards, rules, and expectations” (Agranoff and McGuire, 2001: 673). In short, the top-down model has the following central characteristics: • • • • High levels of executive control and centralized federal management; Federally-managed programs implemented at state and local levels; Emphasis on federal goals and objectives; and, High level of administrative rules with an emphasis on local compliance. The donor-recipient model portrays a much more flexible and interdependent system of intergovernmental relations with federal, state, and local levels representing “mutually dependent” (although potentially antagonistic) actors. In this model recipients need the revenue provided by the federal government but local actors are also needed as recipients and/or clients of, and viable applicants for, federal funding and as necessary implementation arms (Pressman, 1975; Anton, 1989). Thus, while recipients must comply with federal regulations, there is also room to address local needs and for local actors to “find a way to manage a solution within the overall policy framework” set by the federal government (Agranoff and McGuire, 2001: 674). Other attributes of the donor-recipient model include: • • • • • Federal control is replaced with negotiated regulations; Recipients are involved in decision-making and policies; Higher levels of local autonomy and discretion in implementation; Balance of national goals and local needs; and Cooperative relations rather than a command and control structure. The jurisdiction-based model acknowledges the reality that, in many circumstances, federal grants are just one source of potential revenue allowing local governments to address
5 specific problems. Thus, states, regional entities, and a variety of different federal agencies may all represent alternative or perhaps partial sources of funding. This situation fundamentally changes the intergovernmental relationship, permitting more flexible, creative, and complex interactions between federal and local actors, with local officials acting in the interests of their own jurisdiction. The jurisdiction-based model can be summarized as follows: • • • • • • Local officials strategically interact with an array of other actors to meet local needs; Complex actor and funding arrangements; High levels of bargaining and adjustment of federal rules; Locally-initiated interactions to solve local problems; High level of local innovation and willingness to create new relationships; and, Emphasis on local needs and local goal definition. The network model is the most recent intergovernmental management schema and was developed to portray the increasing complexity of the federal system. The central premise of this model is that policy results from a network of actors including all levels of government and both private and public sectors. Local actors can thus assemble coalitions and funding systems that include multiple actors and sources—federal, state, regional, local, foundations, private entities, public-private enterprises and so on—with no particular or consistent dominant actor (O’Toole, 1997). More specifically, the network model includes the following characteristics: • • • • • Collaborative leadership; A mix of goals where all participants benefit; Absence of a central actor or pre-determined goals; Complexity and fluidity of actors in the network; and, Joint decision-making and interdependence among actors.
The discussion by Agranoff and McGuire (2001) from which these models are drawn identified the last two—jurisdiction-based and network—as being “emergent.” However, they also make clear that the “emergent models do not replace the long-standing models” (678). This suggests that intergovernmental models change over time based on fluxuations in the federal governance environment, but that all models may be present simultaneously depending on the
6 program. To take this argument further, it is also possible that different models could be in operation at the same time within the same federal agency or grant program. Thus, for example, some recipients could be more skilled or entrepreneurial or have greater resources, facilitating the more complex jurisdictional or network models. Other recipients may be less independent and management relations may reflect the donor-recipient mode. While intergovernmental programs are designed at the federal level to have more or less command and control aspects or more or less donor-recipient cooperation, it is also likely that local factors will affect and perhaps even shift the intended nature of the management model. Based on their past research, Agranoff and McGuire used a number of examples from economic development to illustrate the operation of both emergent models. This makes sense because economic development, as a policy area, tends to lend itself to entrepreneurial organizational and funding relationships. But, what of other more routine or traditional policy areas such as infrastructure development—roads, water, sewers? Are the more complex, emergent models as likely to be developed here? It seems possible that intergovernmental management models might differ among activities, projects, or purposes within the same grant program. These possibilities pose an even more complex intergovernmental management environment than the four models would suggest. The Role of Decentralization Decentralization has always been a cornerstone of federalism and intergovernmental relations, whether the issue is local policymaking or program implementation and management. And yet, decentralization continues to be the subject of great debate. To the anti-federalists, states were closer to the population and therefore more capable of representing local conditions and local preferences. The constitution emerged as an ambiguous compromise between a unitary
7 system and a decentralized one (O’Toole, 2000: 4). After decades of growth of federal programs and apparent national powers, in the 1970’s the framework of decentralization re-emerged in revenue sharing, which gave local officials nearly complete control over federal funds, and block grants, which shifted both policymaking and implementation within broad substantive areas primarily to local officials (Rosenfeld, 1979). Regional offices of federal agencies were intended to support decentralized management and to decentralize program implementation responsibility from the Capital to federal offices that are closer to the action. Again and again, the framework of decentralized responsibilities emerges. In many ways once there is a mandate for government action, decentralization has become the primary framework. THE ECONOMIC ASSISTANCE PROGRAM The EAP is designed “to address severe economic dislocations, natural disasters, or other special needs. In addition, grants may be used to establish revolving loan funds for business retention, expansion or new enterprise development. Funds are expected to leverage other public and private capital for strategic investments in local capital markets” (EDA, 2003). Grants are made to state, local, and regional actors to foster the design and implementation of strategies or programs targeted at fostering long-term structural change in the recipient economy. The program is funded through regular annual appropriations to the Economic Development Administration but also receives special appropriations to assist communities in responding to specific industry changes or natural disasters. The EAP supports three general types of activities; strategic planning, infrastructure project implementation, and locally administered revolving loan funds (RLF). Implementation activities covered by the program include “the creation/expansion of strategically targeted business development and financing programs such as construction of infrastructure improvements, organizational development and market or
8 industry research and analysis” (EDA, 2003: 7). Strategic planning or “strategy grants” tend to be smaller and more numerous than implementation/infrastructure grants and are typically targeted at building coalitions and cooperative relationships in the development of a plan for responding to specific economic stress. The RLFs constitute the only portion of the EAP that goes beyond emergency assistance. Although the initial capitalization of the RLF occurs in response to an economic disaster, once established the fund can “revolve” in perpetuity, as do the federal reporting requirements. Since the program was begun in 1975 the EDA has awarded 3674 grants for a total of $2.5 billion dollars (see Table 1). As the Table indicates, applicant contributions or matching funds are part of EAP grants and obviously affect project possibilities. There is considerable variation in the size of grants, with defense conversion grants the largest followed by infrastructure projects. Table 1 EAP Grant History All Grants EDA Mean Grant $686,624 Median Grant $300,000 Total Grants $2.500b Applicant Contribution $1.200b Total Project Cost $4.000b Number of Grants Awarded $3674 Grant Range $1649-30 million
METHODOLOGY EAP Site Visit Methodology As part of an evaluation contract with the EDA, case studies were conducted in eighteen representative (a full description of the sampling approach and sites visited is included in the Appendix) communities in which EAP grants were received to provide an assessment of factors that permit programs to be particularly successful, how these programs are designed and
9 administered, and what leads to positive outcomes. Sites were selected using a database of all EAP grants, although only grants during the 1990s were used to select case studies. This time frame was used to ensure that programs had been in place long enough to show effects yet were not so distant that pertinent local personnel would be gone. While 18 sites was of necessity a limited sample, the number and breadth of grants explored across sites was much larger (165) and more representative of the range of experiences with the EAP. Further, the grant/site selection process detailed in the Appendix leads to confidence that the findings from these 18 sites are reasonably representative of the EAP as a whole, particularly for those receiving grants during the 1990s. Representatives from each of the site visit communities were contacted by telephone and email to explain the purpose of the visits. In most cases the listed contact person involved in the grant was asked to assist in making appointments. A follow-up email message of introduction was sent to these individuals explaining the evaluation project and listing all of the grants that were the subject of the study (i.e., all grants received during the 1990s). Generally appointments were scheduled with the following individuals: • • • • • City elected/political officials, City administrative staff involved in the grant, Advisory board members involved in the grant, Staff from the council of governments, regional planning agency, and the economic development district, and Businesses that directly benefit from grants. Interviews were held in a variety of formats; some were one-on-one meetings while others were group interviews. The particular format varied with the preference of local officials. Two members of the research team were present for all interviews, and both members took detailed notes on the meetings, thus providing an opportunity to cross-reference findings. In most (but not all) cases the interviews were tape recorded in case additional cross-referencing
10 was needed. Interviews were conducted between March 2002 and February 2003. The following information was gathered in the interviews at each site: • • • • • • • Detailed description of each type of EAP-funded program; Appropriateness of the strategies employed to the dislocations experienced; Management and administrative arrangements and processes; Financing packages, including additional resources leveraged by the EAP funding; Local stakeholder perceptions of the success of the program; Any challenges local officials have experienced in implementing the program; Exploration of how the EAP-funded activity may have led to other development programs in the community, i.e., the simulative effects of EAP funding.
Economic Development Representatives (EDR) Survey All 32 Economic Development Representatives (EDR) were sent questionnaires designed to explore their perceptions of and experiences with the EAP. These are the front line administrators of the EDA who are charged with working proactively with local communities to assist them in responding to economic development needs that may be met by various EDA intergovernmental grants. These individuals are important players in the application and selection process and in problem solving during program implementation. Of the 32 surveys that were sent out, a total of twenty were returned, a 62.5% response rate. The surveys explored several topics including: barriers to success (local and EDA-based); funding recommendation factors; and the application process. FINDINGS: ASSESSING THE INTERGOVERNMENT MANAGEMENT MODEL Program Barriers and Representative Grant Types While the main purpose of the larger evaluation was to assess the outcomes of the EAP program in terms of economic change, another purpose was to identify the local and federal level barriers to program success. These program challenges, measured at both the regional EDA and recipient levels, say much about the operation of this decentralized federal program. Specifically, through an analysis of federal and recipient level barriers to, and facilitators of,
11 success, it is possible to get a sense of which model of intergovernmental management is most applicable to the EAP. In addition, two representative grant activities—revolving loan funds (RLF) and industrial parks—are described in detail to examine what they add to the assessment of intergovernmental management type. Although the full evaluation examined all possible economic development activities, RLF and industrial parks provide an illustrative summary of this larger analysis. Grantee/Local Implementation and Goal Attainment Barriers Federal Perspectives: Respondents to the EDR survey were asked to assess the seriousness of a list of potential grantee/local barriers to the success of EAP grants. Responses are presented in Table 2 below. Table 2 Grantee/Local Implementation and Goal Attainment Barriers* Implementation Barriers
by the time of project closeout
Poor local factors of production (location, skill 2.94 levels, wage levels, general economy) Poor local administration or implementation of 3.33 programs Lack of local leadership within the administering 3.32 agency/organization Lack of local leadership within the business 2.74 community Lack of coordination/cooperation among local actors 3.00 Inadequate project planning 3.05 Inappropriate choice of project to address local 3.00 conditions Recipients did not communicate sufficiently with 2.89 EDA regional offices Recipients did not adequately work through EDDs if 2.42 present * Mean scores based upon 1 = “not a barrier” and 4 = “very serious barrier” The most serious local implementation barriers identified by the EDR were poor local administration or implementation of programs; lack of local leadership within the administering
12 agency/organization; inadequate project planning; lack of coordination/cooperation among local actors; and inappropriate choice of project to address local conditions. The potential grantee/local implementation barriers that were least serious were recipients did not adequately work through Economic Development Districts (EDDs)i if present; lack of local leadership within the business community; recipients did not communicate sufficiently with the EDA regional offices; and poor local factors of production (location, skill levels, wage levels, general economy). Local Perspectives: One of the central goals during the site visits was to identify both local and federal-level barriers to success from the perspectives of grant recipients as well as through observations by the research teams. It is clear that most projects seem to have been implemented smoothly. For most of the infrastructure projects it was primarily a construction engineering process; once proper plans, approvals and bids were in place, projects were implemented mostly on time and with few problems. Local recipients noted that when problems in implementation occurred, they often revolved around the nexus of political and environmental issues. For example, almost all of the military base conversion projects encountered unexpected environmental hazards requiring more clean-up and greater red-tape working with defense agencies (although not extending to EDA). Local environmental groups sometimes delayed projects over unexpected environmental issues. And, in one case the discovery of a Native America burial ground on the project site required a renegotiation of ownership and land use. Overall, however, it appeared that recipients were able to adjust to these environmental problems, often in creative ways, and to keep the projects on line. The potential for local leadership and politics being barriers to implementation and project success should not be taken lightly. Across the case sites there were a few instances
13 where the EDA projects were not completely effective or possibly even needed. What these cases have in common is conflictual local politics. Infighting and lack of political cooperation at the recipient level can impede all types of development projects. In one site there was a high level of conflict between county and city officials and high levels of turnover at the county. Thus, although the city was the official grant recipient and the problems were at the county level, cooperation between these two actors was critical to the long-term success of the project. At the time of the site visit county turmoil was still so high that outcomes were not certain. Further, there were also philosophical or cultural differences between county and city officials, with the former more traditional, conservative and opposed to development while the latter were proactive and more professional. There were also changes in the development authority charged with marketing the finished project. While the city administered the grant to get the infrastructure in place, actors responsible for attracting tenants had yet to become engaged in the effort. In short, the county’s inability to administer itself slowed city efforts and may have kept more worthy or needed projects off the agenda. In another site the instability within the city (turnover of elected officials, the city manager, and most of the administrative staff including those doing development and all those involved with the EDA grant) hampered planning for development and integration of EDA funding into larger city development plans. Local implementation processes appear to go more smoothly when a consulting firm (and in many cases this is an engineering firm, particularly for infrastructure projects) assists in the development as well as the implementation of the project plan. In one case, where local political changes hampered the recipient’s ability to file EDA reports, the engineering firm took over and did all further reporting, including the close-out report. This alone probably ensured that the project was completed in a timely fashion. In some sites recipients had a long relationship with
14 an engineering firm that also had previously worked on EDA projects, so the firm was involved with all grant planning from the start. This facilitated processes, assured timely completion of a very large and complex infrastructure project, and allowed for the integration of the EDA-funded project with others in the community supported by a host of different funding agencies. Coordinated planning and implementation effort by local, regional and state officials also appears to improve chances for success. For example, in East Grand Forks, the magnitude of the disaster (flood) was so great that there were grants from many sources involved. This was all coordinated and managed by a team of state, federal (EDA, HUD) and local officials that met weekly to identify grants and parcel projects out among grants. The EDR for East Grant Forks was particularly critical to this process. Santa Fe and Sitka also had pro-active planning and cooperation from a team of state, federal, and local actors. Leadership from all actors was critical to the successful implementation of, in some cases, very complex projects. And, site visits indicated that these cooperative relationships were still in place, suggesting the development of long-term cooperative networks. EDA-Level Barriers to Success Federal Perspectives: A separate series of questions asked EDR respondents to identify agency-level barriers to project implementation and outcome success. EDRs were asked to “indicate the extent to which each of the following EDA-level factors serves as a barrier to successful EAP activities among local recipients” (responses are shown in Table 3). As the data indicate, none of the EDA-level implementation barriers were viewed as being as serious as the top five grantee/local barriers. The most serious EDA-level implementation barrier was “inadequate funding levels.” The least serious were “Federal EAP authorizing legislation creates
15 administrative hurdles,” “Federal EAP authorizing legislation limits project options of recipients,” and “Federal EAP administrative rules/regulations create administrative hurdles.” Table 3 EDA-Level Barriers to Success* Implementation Barriers
by the time of project closeout
Inadequate funding levels 2.95 Insufficient direction from EDA regional offices 2.47 Federal EAP authorizing legislation limits project 2.00 options of recipients Federal EAP administrative rules/regulations limit the 2.26 project options of recipients Federal EAP authorizing legislation creates 1.78 administrative hurdles Federal EAP administrative rules/regulations create 2.11 administrative hurdles * Mean scores based upon 1 = “not a barrier” and 4 = “very serious barrier” Local Perspectives: It is probably not surprising that respondents to the EDR survey were able to identify more important local barriers to success than EDA-level barriers. Yet, decentralized EDA staff would be in a particularly good position to comment on whether the authorizing legislation or federal regulations serve as barriers. However, the site visits identified a variety of federal issues that potentially limited the success of the EAP program. Observations include both barriers to success and also comments on the many aspects of the program that foster implementation and goal attainment success. It was noted that applying for EAP funding is “quite a process,” requiring many steps and attendant paperwork; one application can cost $3,000 to $4,000 in staff time, not including engineering and environmental studies (although overall this may well be a bargain). And, of course, it is impossible to create regulations that make sense under all local conditions; for example, all Santa Fe applications have to include wetlands certifications. However, it was also noted that while the process is difficult the first time, it is very logical and not problematic with
16 subsequent projects. Obviously, having staff, a consultant, or Economic Development District (EDD) staff that are experienced with EDA is a real asset in getting through the application and reporting stages. This of course is one of the great benefits of going through the EDD or the EDR and is part of their purpose. Thus, while a lengthy application process is probably necessary to ensure quality projects that meet EDA goals, success in the application process may be a proxy measure of local ability to conduct the subsequent project. However, it is also the case that most smaller places just do not have the type of staff resources available to even apply for the grant – at least without EDD assistance. Finally, recipients also indicated that the biggest challenge was not getting projects to conform to EDA guidelines and processes but to address the conflicts with and overlapping guidelines of other funders, such as state departments of economic development and other agencies. Federal and state regulations are not always consistent. Despite the importance of EDA assistance, recipients also mentioned that while the willingness to help is great, the timelines are often slow. This creates problems with disaster projects in particular when the community needs funding immediately. The system is not set up for “ASAP,” as one respondent noted, but this is inherent to most federal grant processes. There are ways to address this issue within the grant program, however. For example, East Grand Forks did their flood grants as “quick start” grants, allowing them to get the project started before all the approvals came in. In these cases applicants must still produce all the paperwork but the projects can begin while applications are pending. It was noted across most of the sites that budgetary cutbacks in Washington are threatening the viability of the program as they percolate down to the regional offices. For example, the regional representative helping Santa Fe is also working on 70 other projects.
17 Requiring each EDR to be responsible for a larger area or more grants means that key characteristics of the program--long term relationships between the EDR and applicant and hands-on assistance--are weakened. The eligibility criteria for grants appear to be barriers in some cases and perhaps unwarranted facilitators in others. The ability to use county unemployment figures in establishing eligibility allows rich places in poorer counties to become eligible for funding, likely a subversion of program goals, and assists some recipients who could have supported projects in other ways. Conversely, the Santa Fe area is often ineligible because aggregate incomes are high and unemployment low, yet there are significant areas of persistent and isolated poverty and unemployment. Matching fund requirements were a consistent topic of concern for recipients. The issues raised are summarized below:
Many applications end up being delayed until matching funds can be found. This is obvious but has implications for needs that are emergent and severe in nature. Some project applications never get submitted because of the match. Many successful recipients indicated that they had other projects that would benefit the local economy and would be eligible for EAP funding, but they had to forgo an application because they could not come up with the local match. Thus the matching requirement keeps even recipients with EDA track records from applying in some cases. The match is particularly difficult for nonprofit or quasi-public applicants. Thus, match requirements become a particular barrier to grants to smaller community groups or nonprofits. It was noted that a 50% match is just beyond many potential recipients – “you can’t get blood out of a turnip.” The other concern with the match is that many much needed and important projects like major wastewater investments are extremely expensive, so the 50% is just impossible. The specific percentage of the match then restricts what can be done to address local problems. And, chronically poor areas simply can’t come up with the 50% match under any circumstance, so EAP funding is basically not available. In some cases projects were significantly scaled down from the original pre-application because the applicant could not come up with the 50% match.
Summary: The Role of Leadership, Economics, and Federal Funding The survey of EDRs indicated that the most consistent barriers to both project implementation and goal attainment at the local level are poor local administration, lack of local leadership, and poor coordination among local actors. These barriers are, of course, closely related. Leadership and administrative capacity are required to build the types of cooperative arrangements that assure strong and effective project implementation as well as to conceptualize appropriate projects in the first place. While the EDRs clearly have a strong role in this latter effort, once the project is implemented local factors clearly come into play. Extremely successful and innovative projects appeared to have one component in common – historically strong and entrepreneurial political and administrative leadership. These projects emanate from local recipients where there are individuals skilled at putting deals together, writing grants, coming up with funding from a variety of sources, and administering multiple and complex projects. In short, they all include an individual (and in many cases several individuals) who are savvy and entrepreneurial. Often these local policy entrepreneurs are located within an EDD, but they are also in city management, local planning offices, development authorities, and in a few cases within community groups. Conversely, although there were no projects that would be considered “failures,” there were several that had yet to achieve optimal goal attainment. In these cases local political or cultural conflict appeared to get in the way of successful project implementation. It was also clear, however, that those projects yet to fully achieve their goals occurred in locations that had other economic and environmental barriers to project success. For example, the two industrial parks that were not fully successful were located in isolated areas that had
19 either transportation or skill deficits or both. They simply were not locations attractive to large employers. Conversely, some of the very successful projects (several of the military base conversions, for example) occurred in regions and metropolitan areas experiencing strong economic growth. Thus, skilled employees were readily available, there was little collateral loss of businesses or residents, and local governments had strong tax bases to pursue other types of development. Local factors of production clearly matter in grant success. It is also important to note that to the EDRs, potential barriers that are external to grant recipients’ internal political and administrative capacity are of little importance. Thus, the business community, EDDs, and the EDA staff are not seen as limiting factors. Rather, their focus is primarily upon the internal capacities of grant recipients. Finally, that the EDA funding level was the only federal or program-level barrier identified by the EDR is not surprising, but is critically important. In many cases concerns or barriers identified by recipients are related to lack of staff in the regional offices. The ability of EDR to work closely with recipients through all stages of the process and to develop longstanding relationships is central to effective functioning of the EAP program. In large part it is these relationships that allow an emergency program to operate smoothly in times of stress. By reducing regional office staff, EDRs are required to deal with more grants and larger territories, thus potentially weakening the most important link in this grant program. What do these barriers have to say about intergovernmental management models? First, while eligibility criteria, paperwork, and matching requirements were mentioned as being problematic, they are also standard components of grants across federal agencies. Respondents consistently noted that the EDA is easier to work with on these issues than many other federal agencies (SBA, FEMA, DOD, HUD, for example). This suggests sufficient regulatory flexibility
20 to place EAP outside of traditional top-down programs. Local leadership appears much more critical to program success or failure and revolves precisely around those skills necessary for the emergent management models to operate; cooperation, coordination, inter-organizational linkages, creativity, and entrepreneurialism. More successful recipients are clearly managing networked connections involving other state and local public agencies, other federal agencies, and a host of private and nonprofit local partners. An important part of this network includes working with EDRs. Recipients weaker on those skills must rely more heavily on EDA assistance via the EDR, creating a donor-recipient relationship. EDRs understand the importance of internal capacities of grant recipients and step in to help when needed. Thus, the absence of network skills and resources does not rule out EAP funding nor does it imply problems in completing plans or projects. It does suggest that this federal program will operate in a more traditional model for them than for recipients having developed a more jurisdiction-based or networked approach, and that reductions in regional support capacities will be a greater loss. Intergovernmental Lessons From Two Programs: RLF and Industrial Parks There are a number of aspects surrounding the implementation of RLF grants that say much about the nature of the management model. First, recipients appear to be consistently challenged in getting funds loaned out quickly enough at the beginning of capitalization to meet EDA guidelines. Indeed, getting all of the money loaned out is one of the primary measures of RLF success noted by EDRs in the survey. Delays in loaning funds can occur for several reasons: the time needed for someone within the recipient organization to get properly trained on how to run an RLF; the time necessary to publicize the new RLF and find initial participants; the presence of natural disasters such as floods that have to be dealt with immediately (indeed, disasters often lead to the RLF); and, the challenge of finding local banks willing to participate in
21 the program. EDA time requirements cause several local coping strategies that can hamper long term goal attainment including undertaking riskier loans in the early years just to get rid of the money and backing fewer, larger loans early on. Related to this is the widespread concern that the RLF does not come with any administrative support. Those costs either need to be supported by interest from the funds, which is not immediately available, and future grants, or the administration must be borne by a local entity. The Aurora model, where the city pays for the RLF administrator, seems to be a good one but is only viable in cases where the recipient has sufficient own-source revenue. For nonprofits in particular the administrative costs may make a RLF out of the question. It also appears that EDDs have a quicker start-up time and probably more expertise to initially run the RLF. Many comments were made about the process for recapitalization of the RLF. This is a relatively good indicator of success because it shows that the loan was marketed well and that there was demand in the local area. But, as one recipient noted, to get a recap, “you have to go through the whole stinking process again.” There are no options or alternatives for a streamlined recap process for those that have had a successful, problem-free RLF over a defined period of time. A similar regulatory concern is that reporting requirements last forever. In one site the RLF was from the 1970s yet they are still required to report regularly to EDA. Recipients feel that at some reasonable point, after they have shown a track record of running the fund, and after all the money has turned over, that reporting requirements should stop and the RLF be considered a recipient asset. Recipients do not report forever on infrastructure or industrial park grants but the RLF requires reporting in perpetuity
22 The whole premise of EDA guidelines involving the RLF is a delicate balance; recipients can only make loans to firms that could not get conventional funding, but they are also supposed to be bankable under reasonable standards. This sometime causes loans to be directed towards “failures,” those that can’t get conventional loans because there is something wrong with the business or business concept and away from already succeeding firms that would probably be able to generate even more jobs. A number of other EDA RLF requirements are seen as being too restrictive, potentially limiting the ability of the program to be flexible and meet local needs. The requirements mentioned are listed below: • • • • • Matching requirements force larger deals. Loans are too geographically restricted. There is too much focus on job generation requirements – there are other important goals. Guidelines are too focused on economies that are isolated. Restrictions really prohibit micro-lending because it is too risky. Finally it appears that there are potential conflicts between federal and local conceptions of the appropriate goals for the RLF program. The EDA focus is on job creation and retention but for business owners who receive the loans, the goal may actually be to hire fewer workers and get the same product with lower costs (i.e., through equipment or process improvements). Thus, the loans may be helping to create or expand local business investment but may actually be reducing jobs. Also, the goal for individual business owners is not to hire as many people as possible but to generate wealth for families and have a stable income. Similarly, for communities, the goal may not be just job generation but wealth generation, thereby increasing the stability or sustainability of the economic base, which addresses other important EDA goals. The RLF portion of the EAP is instructive in several respects. First, as noted previously, it is the only element of long-term assistance within a program that is focused on emergency aid. Although created as a response to an economic disaster or dislocation, because of their revolving
23 nature, RLF becomes a long-term asset to the recipient economy. Also, because RLF allocations are typically relatively small (usually about $400,000 to $800,000 at start-up with the possibility of recapitalization) they are more likely to be solely funded by the EAP. Thus, while the RLF may be part of a networked local response to an economic disaster involving other projects and funders, they do not require a full network to be implemented. As a result, the types of concerns and challenges that recipients experience with RLF echo a more traditional, top-down model. The use of EAP funds to create industrial parks provides an interesting contrast to RLF funding. While the full evaluation considers and assesses a variety of aspects of industrial park funding and implementation, several aspects of, or concerns about, them are summarized below because each has something to say about the intergovernmental management style of funding this particular economic development activity. First, it was clear that successful industrial parks appear more likely to occur when coupled with other local development activities such as active business recruitment efforts and funding for new firms via a RLF. Overall, however, the success of industrial parks appears tied to local factors of production, perhaps more strongly than other types of EAP investment. Thus, one facility had only two tenants because of several local factors: few large firms looking to move to the location because of poor air, rail and highway access; insufficient marketing; insufficient park size because of environmental constraints that limited development due to water run-off regulations imposed by the state; and, the major firm that was planning to go into the park ultimately backed-out because they couldn’t get the park together fast enough. The lessons suggested here are that the park will be more successful if more is done than “build it and they will come.” A desirable location is needed to attract rather than develop industry and the provision of loans along with the park infrastructure assist start-ups as well as expansion of firms
24 within the park. Thus, industrial parks are more successful when tied to other investments and institutions. Unless there is considerable advance funding for both infrastructure and buildings, or loans to help firms build structures, it may take a long time to get parks up and going. It appears to take time and perhaps multiple grants to get the infrastructure in place before local actors can really begin to market the park. Years after the grant, one community was just getting to the road infrastructure that would allow the park to be connected to a major highway. Natural gas is still not out to the park. The bottom line is if recipients only have enough money to do the infrastructure in pieces, and they can’t get the basic infrastructure completed, development will be delayed. Another important issue related to industrial parks is the pricing of the land, an issue often caught up in local political and turf issues. Local zoning regulations can also impact the success of an industrial park. Exclusive industrial zoning to prohibit warehouses, since they provide few jobs, can reduce the number of tenants and may limit options to recoup tax base investment from “non-traditional” tenants such as dance studios. EDA regulations requiring that a particular firm interested in locating in the industrial park must be lined up in advance in order to get funding were viewed as being problematic in several communities. Recipients generally can’t develop the park fast enough to satisfy an already interested firm. Because it takes so long to develop the entire infrastructure, and by definition the EAP money won’t pay for the whole park since it is for emergency assistance, the real purpose of it is future development or speculation. Thus, there is an incentive to overstate the interest of a particular firm to get the money. The federal focus on attracting outside firms as
25 a requirement of funding does not address local needs to build the local economy and is simply not a viable option for isolated areas. These points about industrial parks and the EAP lead to several observation. First, unlike the RLF, the success of an industrial park is dependent on a broader network of actors and activities. The infrastructure must be created and then businesses need to be recruited—a process facilitated by small business loans, support services such as incubators, and strong ties to local and regional business assistance efforts. Second, EAP assistance is not sufficient to complete and then market an industrial park. While it may get the project started, other state and federal grants, often over a period of years, are necessary to complete the infrastructure. Other funding, often local, is then required to market and run the park. Finally, while some EDA regulations governing the parks such as the need to have an identified prospective tenant are problematic or perhaps unrealistic, the overall success of the park is dependent on the local capacities and networks critical to implementing a long-term, complex economic development project. As a result, recipients with successful parks are much more likely to be operating on a jurisdiction-based or network model. Top-down and even donor-recipient models appear not to be as effective in these cases. Finally, a strong local conception of goals is also vital for industrial parks. Federal goals emphasize the relocation or expansion of existing firms. Local recipients have discovered that industrial parks must have both relocated and new, homegrown firms to succeed and that this is particularly the case in isolated areas. Hence, jurisdictionallydriven, creative solutions include the partners and money necessary to provide the types of assistance needed by start-ups; buildings, services, loans and so on.
26 The Role of Decentralization and Regionalism EDA funding as a whole is highly decentralized. The country is divided into six regions and each regional office has primary responsibility for grant allocation and oversight. While there is consistency in basic processes and goals across regions, under national guidelines, there is also a relatively high level of regional discretion in what projects are selected, which goals are emphasized, geographic and programmatic distributional patterns, and in the amount of assistance provided applicants. A brief summary of the EAP application process used in most regions is instructive of the power of the regional offices – they are where decisions are made about projects. The economic development representatives (EDR) in the field work with applicants to develop a concept for a proposal and an initial brief proposal. The regional offices will then “invite” applicants to submit full applications. They will do this only for applicants who have already been working with the field staff and an invitation is typically tantamount to being funded. From interviews with regional staff it appears that there are two pivotal criteria for selecting projects; intuition and experience. Regional staff and EDRs have long tenures in many cases, so the selection “is an art rather than a science.” And, there does not seem to be a lot of interregional coordination (and perhaps not a lot of consistency) in how this is done. As noted, EDRs are critical to the operation of this decentralized program. While they technically operate out of the regions, many are located at offices in the field and all are EDA’s personal “face” to local recipients. The EDRs serve as “gatekeepers” by assisting with the development of some projects and discouraging others. Very few projects are funded without the involvement and approval of the EDRs. In short, EDRs are central to the success of the EAP grant program. They provide examples of successful applications, provide assistance in project planning and application development, in some cases lobby for the project at the regional level,
27 and put applicants in touch with each other to provide assistance. The majority of EDR relationships are with local governmental actors so it is challenging for neighborhood or nonprofit actors to identify the proper assistance to prepare a grant. And, it appears that it takes longer for them to get approval (likely absent the type of grant track record held by local governments). Since it was noted in several sites that early applications for EAP funds initially sent to EDA, without working through the EDR, were not funded while second applications with EDR involvement were successful, it is clear that the interactions with an EDR are essential as those applicants with closer and more consistent ties are more likely to be successful. In many cases, the inherent flexibility and decentralization of the EAP was emphasized as an important factor in local success – for applications, implementation and for the ultimate attainment of project goals. For example, it was noted that the EDRs are able and willing to help local applicants repackage projects if they were not eligible as originally conceived. If a project can’t qualify under “sudden and severe” definitions, the EDR may assist in developing and combining projects to get disaster money, for example. Similarly, regional staff appear to be sufficiently flexible with regard to how grants are put together, so that the program can meet local needs. The East Grand Forks flood grants were treated as individual projects, which the recipients felt was advantageous because it was easier to track everything, assign the proper projects to the proper grants, and facilitate grant management. In San Antonio and Charleston, however, the region allowed several grants to be packaged together into “mother grants.” The recipients thought this was advantageous because it allowed them to organize the various efforts into one and to allocate projects and needs between the grants; administration was easier as a package in this case. In short the regional structure and flexibility allow for variation in grant
28 structure to meet local needs, and is designed to move the agency and the grants away from the top-down model of intergovernmental relations. Federal versus Local Goals and Solutions As a general rule all of the recipients indicated that EDA would fund essentially what they needed to foster economic development. Thus, there appears to be little overt conflict or antagonism between federal goals and local needs. However, it was also apparent that recipients would have done things in a different sequence or that there were more important things not done because they didn’t fit EAP guidelines. While EDA regulations support local needs as far as what projects are funded, they do impact how the project is done. In part, this is a strength since it allows the EDA to guide local endeavors. However, it also means that there is some tendency for federal guidelines to subvert or frame local needs in ways that might not be most advantageous from a jurisdictional perspective. There is probably no way to avoid this but it obviously occurs in even decentralized programs. For example, on one of the base projects, telecommunications infrastructure was developed before several more basic infrastructure improvements, leaving the site with high-speed internet connections but incomplete road connections. Across the cases recipients noted that the most pressing needs are funding for infrastructure maintenance and speculative or shell buildings rather than basic infrastructure like water and sewer, but these tend not to be eligible under program guidelines. Another base conversion that addressed federal and regional goals for job training and development didn’t complete as much infrastructure renovation on the base as the local recipients would have liked. Because they focused on training, the base still looks substantially like a base, instead of an industrial park or a “campus” as businesses desire, hampering the attraction of new firms.
29 In a larger sense the overriding goal of the EAP program is job creation. However, local goals may be very different; wealth creation, diversification of the economic base, even growth management in some cases. EDA guidelines also favor projects for which there is an identified business tenant; i.e., incubators, industrial parks, and infrastructure. However, in many cases the investment is needed first with the economy developing generatively, an entirely different paradigm of growth operating in many localities. It may be that the operative local growth dynamic in localities begins with increases in individual wealth, leading to increased tax base, leading to increased community wealth. The EDA causal chain is focused on investment leading to jobs that lead to community fiscal health. The EDA is less supportive of different local views of ideal growth or different paradigms of growth. It was also mentioned at several sites that the EDA vision of economic goals is not really keeping up with changes in the national and international economy. For example, the EDA has traditionally focused on brick and mortar projects. However, as shifts occur in an information economy, such projects become less important to developing jobs. Local recipients are forced to fit their needs into a project-based system in the face of changing economic needs for operating money, venture capital, speculative investment in infrastructure, speculative shell buildings, and so on. A final consideration regarding the relationship of federal goals and local needs is the question of whether projects would have been implemented or the outcomes achieved absent EAP funds. If projects would have been undertaken, in essentially the same form, regardless of federal support, then implicitly this particular federal program would be having little direct influence in guiding and focusing local goals and activities. What would have happened absent the grants is almost impossible to assess in the real world, where confounding events cannot be
30 held constant and where creation of counterfactuals is impractical. The problem of fungibility of federal grants is an ever-present one that is nearly impossible to quantify precisely. The site visits provided an opportunity to ask local recipients whether the programs would have been implemented and goals achieved without EAP funding. Below is a summary of the local responses to this question along with observations from the site visit teams. • Without external grants the city of East Grand Forks would not be in existence due to the extreme nature of their flood damage. But, they had a complex set of federal (EDA, FEMA, CBDG) and state funding. If EDA funds were not involved would it have mattered? It seems that the support and input of the EDR was critical in this case. The EDA was the agency most strongly supportive of the creative flood control solution employed. The EDA provided the flexibility for creative local solutions. For San Antonio, the issue was not whether they would have invested in the base without EDA, but whether the rapidly growing economy would have replaced the jobs without much being done to the base. Local officials suggested that nothing could have developed on the base without proper water systems and that no firm could have used the hanger facilities because they weren’t large enough and did not meet current codes. Some investment was needed regardless of the growing economy, and the emergency nature of the grant may have stemmed business and resident relocation. The Santa Fe business incubator would likely have occurred anyway. EDA money supported an expansion, they had raised a lot of their own money in the first place, and the expansion had 14 different funding sources (state, city, regional development corporation, bank donations, phone company). Without EDA money they would have had to borrow more money limiting the space developed, reducing operating money, numbers of tenants, and rental income. In Charleston the aquarium project would eventually have happened without EDA money. However, they would not have had the same level of private confidence so donations would have been less, the project would have been delayed, it would have been done on a much smaller scale, and the non-profit operator would have begun businesses with greater debt. There is a general feeling then, that EDA funding frees up local money so the overall effect is substitutive or fungible rather than stimulative. The fact that most of these projects would have been done anyway in some form bears this out. However, there is also another dynamic at work. Many of the projects are emanating from local recipients, skilled at putting deals together, writing grants, and coming up with funding from a variety of sources. Thus, there is a twofold dynamic – applications come from areas that have creative and skilled individuals
31 but these individuals would have found other funding anyway. In addition, there is ample evidence to suggest that EDA funding accelerates projects, encourages creativity and aggressive approaches to recovery, attracts other funding, preserves local public capital that makes complementary projects possible, and preserves private capital that makes businesses more stable. In summary, there is a mix of federal and local goals present within the EAP. The fact that most local projects would have been undertaken absent federal funding, albeit at reduced levels or slower time frames, again suggests that this is not a top-down program where recipients are dependent upon and beholden to national support. Some projects were more dependent on EDA funding than others and hence local recipients were likely to engage in activities that closely met the spirit and intent of federal guidelines. However, several of the projects were clearly locally initiated, were supported by funding by a variety of public and private sources, and were implemented by complex groupings of government, nonprofit, and business bodies. In other words, for many of the most complex projects—the complete rebuilding of East Grand Forks and large military base conversions—there is substantial evidence that local actors have developed networks that allow local needs to guide overall activities, ensuring that projects would have been completed even absent federal money. CONCLUSION There is little evidence of a top-down model of intergovernmental management within any component of the EAP program. While the nature of intergovernmental relations varies widely among different program purposes such as revolving loans and industrial parks, they all fit within the cooperative or collaborative or networked end of the scale. Clearly, local officials are working as equals with EDA officials in selecting targets, designing programs, and
32 implementing projects. EDA’s model of regional decentralization and field-based Economic Development Representatives is designed in part to facilitate and accomplish this kind of collaboration. It enables federal staff to develop working relationships with their clients, to know key actors in many economic development communities, and to be prepared to facilitate networked relationships when needed. The capacity for and the orientation to collaborative intergovernmental management are dependent in part upon the political and administrative leadership in the local economic development arena. EDRs understand that the principal barriers to successful project implementation and goal attainment are primarily within the local political and administrative leadership. While the EDRs view factors that are external to grant recipients as less important— e.g., support from business, Economic Development Districts, and the EDA itself--there is substantial evidence that local economic development agency entrepreneurs are at the center of a network that carries out intergovernmental programs. These external factors are of less importance only because an effective entrepreneur can provide the leadership to work with or around the external resources that are in play. But even when a local manager is not oriented to network management or is unsuccessful in working with a broad local network for economic development projects, EDRs are prepared to help fill the void. Although this study focuses exclusively upon field experiences of economic development, it appears that all such policies or programs are not characterized by the same approach to intergovernmental management. Clearly RLF programs require a less networked approach than industrial parks. A local manager may succeed with an RLF without a broad network of relationships. Such success may be narrowly conceived as loaning funds to thriving businesses that may or may not be creating jobs. While blending an EDA-funded RLF with
33 funds from the Small Business Administration, Community Development Block Grants, private sources, and local accounts may expand the reach and impact of the RLF, such a network is not necessary to achieve success. In contrast, where an industrial park is attempted, it is difficult to imagine any level of success without working with other public and private funding sources to complete the infrastructure and to provide the necessary support services. Clearly, a vertical and horizontal networked management style is essential in this latter case. The analysis suggests categorizing the field observations within three models of intergovernmental management that all have some dimension of collaboration: donor-recipient, jurisdiction, and network. It may be impossible to classify even a single grant program located within one federal agency as being completely within one model of intergovernmental management. The EAP program is designed with a donor-recipient framework with regionalization and the EDR designed to work with local clients to create projects that meet federal goals. Federal reporting guidelines requiring regular progress reports and an extensive closeout statement also suggest that the intent is for the federal government to be primus inter pares for this program. However, while RLF funding operates most closely in that framework, it is clear that other aspects of the program do not. This highlights the fact that actual or informal management interactions of federal programs may differ from formal expectations. Industrial parks are an example of an aspect of program funding that operates in a much more collaborative fashion. Indeed, depending on the recipient the application models can either be jurisdictional or networked. The critical difference in these two approaches is the extent to which policies emanate from a potentially changing network of local actors that often bridges public and private sectors. The stability of the network is dependent on mutual leadership and reciprocal gain
34 among participants, interdependence between actors, and joint decision-making. Some grant activities—industrial parks in some cases but business incubators and military base conversions in particular—lend themselves more to a network model, the criteria for classification lies within the environment at each local recipient. Thus, there were examples of jurisdiction-based as well as networked models in operation. Future research is needed to explicitly explore some of the underlying dynamics of these environmental forces. While this research has indicated that within the EAP different models are operative, depending on the grant activity and recipient, it has not explored the question of why networked models develop in some communities and not in others. Operative models of intergovernmental management may depend upon grant activity type, local expertise, the size of the local disaster or problem, and other aspects of the local culture. Research explicitly exploring the relationships between these factors and management models would be a useful and interesting addition to the literature. Further, it would be extremely useful to understand more about the stability of extant networks: how stable and enduring are such networks; are some networks more stable than others; and, to what extent does success in both getting and implementing federal grants depend upon network stability? A longitudinal examination of federal programs would provide insight on the changing nature of the federal system. For example, several trends appear likely within the EAP program, including budget cuts that will reduce the number of regional EDRs and thus limiting assistance to local recipients, that will likely hamper the efforts of communities functioning under the donor-recipient model to assemble applicable projects and grant applications but having little effect on more networked recipients. This may change the nature of the projects and recipients supported by the EAP program and may limit the extent of federal influence over local goals and
35 projects. What is clear is that the nature of intergovernmental management continues to change and that research on such questions will contribute to understanding of both the theoretical dynamics of the process but also point to the skills and resources necessary at the local level to successfully compete for federal funds and implement projects. .
36 APPENDIX EAP Case Study Sample Selection This section describes the methodology for selection of EAP case study sites. The selection is based upon data drawn from the universe of Economic Adjustment Program (EAP) grants over the life of the program, from Fiscal Year 1975 to 2001. These data were provided to Wayne State University from EDA’s central database on the EAP program. Six factors are identified which provide the basis for sample selection. Approximately $2.5 billion in grants have been made through 3674 individual awards during this time period, with a mean grant of $686,624. EDA funds have been leveraged for a total of $4.0 billion in project expenditures (See Table A-1). Slightly more than one-half of the grants and almost 60% of the funds were allocated during FY 1990-1999 (See Table A-2). This study analyzes Fiscal Year 1990-99 grants only, which constitute 54.5% of all EAP grants awarded and 59.3% of all EAP funds. We focus on this time period in order to achieve consistency in local personnel while allowing sufficient time for policy impacts to be achieved (FACTOR ONE: 1990-1999). EDA Regional staff suggested that for earlier grants it would be difficult to identify and interview personnel who were around when the projects were implemented. For this 19901999 subset of the universe of grants, 32.9% are from 90-94 and 67.1% are from 95-99. The balance of this analysis will focus on the subset of 1990-1999 grants. Table A-1. Grant Summary All Grants EDA Mean Grant $686,624 Median Grant $300,000 Total Grants $2.500b Applicant Contribution $1.200b Total Project Cost $4.000b Number of Grants Awarded $3674 Grant Range $1649-30 million
1990-1999 $746,896 $337,500 $1.500b $.710b $2.400b $2002 $1649-30 million
Table A-2. Fiscal Year of Grants Fiscal Year % of Grants % of Funds Case Study Sample 75-79 10.0 13.9 80-84 10.4 9.6 85-89 9.5 5.2 90-94 17.9 21.5 7 95-99 36.6 37.8 11 00-01 15.6 12.0 Because of the variation in volume of grants and funds awarded by region (See Table A-3), the case study communities were selected to give greater weight to the Seattle region and lesser weight to the Austin and Chicago regions (FACTOR TWO: REGION).
37 Table A-3. Regional Distribution of Grants 1990-1999 Region % of Grants % of Funds Case Study Sample Atlanta 19.1 18.6 3 Austin 7.7 6.8 2 Chicago 10.8 10.1 2 Denver 15.3 17.2 3 Philadelphia 18.4 20.1 3 Seattle 28.7 27.2 5 Grant sizes range from $1649 to $30 million (Table A-1). There is a large number of small grants (See Table A-4), accounting for a very small portion of the EAP funds. In fact 30% of the grants account for only 2.3% of the funds. The sample could be selected to reflect either the distribution of grant sizes or the proportion of all EAP funds. These two factors were blended together in order to provide sufficient analysis of the small grants, which may constitute a significant portion of the EDA workload (FACTOR THREE: SIZE OF GRANT). Table A-4. Size of Grant 1990-1999 % of Grants % of Funds 16.2 14.1 12.9 19.2 17.5 20.2 .8 1.5 3.2 10.7 19.3 64.4
Size of EDA Grant $1-50,000 50,001-100,000 100,001-250,000 250,001-500,000 500,001-1 million Greater than 1 million $1-100,000 100,001-500,000 500,001-1 million Greater than 1 million
Case Study Sample
30.3 32.1 17.5 20.2
2.3 13.9 19.3 64.4
5 5 3 5
There are six basic clusters of EAP grants: Defense, Disaster, Economic Adjustment (EA), Revolving Loan Fund, Other Long Term Economic Disaster (LTED), and Other Sudden and Severe Economic Disaster (SSED) (See Table A-5). There are so few trade grants that they were not analyzed at all. Grants may be strategy, implementation or combined. As an aside, it is noted that the types of grants made during the 1990-99 study period differ slightly from the universe of all EAP grants since 1975: there are more Defense and Disaster grants in the study period, and fewer Emergency Assistance, Revolving Loan Fund, and other SSED. Stand-alone strategy grants represent 20.7% of all grants during the study period. Case study communities were selected to represent the variety of grant types (FACTOR FOUR: TYPE OF GRANT/TOOL).
Tool Defense (EA & Impact) Disaster EA RLF Other LTED Other SSED Other Strategy (overlaps above)
Table A-5. Type of Grant/Tool All Grants 1990-1999 % of Grants % of Grants % of Funds 17.5 15.4 17.4 15.2 10.4 22.8 1.3 (23.3) 25.3 26.1 8.9 10.2 12.8 16.2 .5 (20.7) 49.1 30.8 2.5 5.3 4.2 8.0 .2 (4.3)
Case Study Sample 6 4 2 2 2 2
Once again, the factor of grant size is important to consider, here in relation to grant types or tools. Defense grants tend to be large, although not all are large (Table A-6), while Emergency Assistance, Other LTED, and other SSED all tend to be small. Revolving Loan Fund grants are overwhelmingly between $100,000-$500,000. Accordingly, the case study sample reflects the grant type based upon a blend of distribution of grants and distribution of funds (FACTOR FIVE: GRANT TYPE AND SIZE OF GRANT). Table A-6. Grant Type and Size of Grant 1990-1999 (row percentages)* Tool $1-100,000 $100,001$500,001More than 500,000 1 million $1m Defense (EA & Impact) 11.4 (1) 19.2 (1) 21.4 (4) 48.1 Disaster (1) 19.8 (1) 34.3 (1) 23.1 (1) 22.7 EA (2) 67.8 20.3 9.0 2.8 RLF 2.5 (2) 89.7 6.9 1.0 Other LTED (1) 59.8 (1) 25.3 10.5 4.3 Other SSED (1) 50.0 23.9 (1) 16.1 6.8 Strategy (overlaps above) (3) 74.3 18.6 *Case study communities are identified in parentheses. 4.1 2.9
39 Finally, case studies were selected to reflect the regions’ usage of various grant types/tools, per Table A-7 (FACTOR SIX: REGION AND GRANT TYPE). Table A-7. Grant Type and Region 1990-1999 (row percentages)* Atlanta Austin Chicago Denver Phila. (1) 2.7 (1) 0.5 8.7 (1) 11.7 (1) 28.2 (1) 28.8 9.0 (1) 19.6 1.9 9.8 (1) 14.3 7.5 (1) 20.2 13.7 20.2 (1) 22.0 (1) 18.2
Tool Defense (EA & Impact) Disaster (1) 9.6 1.9 (1) 15.5 EA (1) 3.6 6.7 7.9 RLF 24.0 12.7 (1) 19.1 Other LTED 1.6 (1) 12.8 3.1 Other SSED 21.0 4.3 9.1 (Strategy) (1) 22.3 9.0 7.5 *Case study communities are identified in parentheses.
Seattle (2) 28.2 (1) 16.7 32.6 10.8 (1) 60.3 (1) 33.8 28.8
In summary the EAP case studies represent the following: FACTOR ONE: 1990-1999 FACTOR TWO: REGION FACTOR THREE: SIZE OF GRANT FACTOR FOUR: TYPE OF GRANT/TOOL FACTOR FIVE: GRANT TYPE AND SIZE OF GRANT FACTOR SIX: REGION AND GRANT TYPE In selecting the individual communities/grants to meet each of the above criteria, EDA Regional staff were asked to suggest potential case sites based upon the following factors: • recipients or areas with long term on-going internal partnerships; • recipients or areas with long term on-going relationships with EDA; • Continuity of individuals or organizations in the locale (an organizational memory); • Range of projects or project type mix – say 4-5 RLF, 1-2 disaster mitigation projects, 2-3 defense projects, 4-5 implementation projects; • A couple of the projects should include funding for both a strategy and a project; • A variety of project time-frames – older projects need to still be in the archives, no projects more recent than 1999; and, • Represent all areas of the region. The six sample selection factors and the regional recommendations were used to select the case study communities (see Table 8). Eleven sites were chosen from Regional recommendations; seven were selected independently. All of the grants/communities that met each of the factors were then arrayed on a spreadsheet and individual grants/sites were selected until the desired balance on each of the six sample selection factors was achieved. While the sample was drawn on the basis of individual grants, this approach was used to identify communities to be studied. Thus, the unit of analysis of these case studies is the individual community/county, which received EAP funding. In addition to studying the sampled grant, case studies analyzed most of the EAP grants going into a sampled county. The only exception to this approach was in Los Angeles, where the sheer volume of grants was too great to analyze in its entirety.
EAP Sample Sites
REGION State County Atlanta SC Charleston Austin TX Bexar Denver CO Adams Philadel RI Washington Seattle CA San Bernardino Seattle AZ Maricopa Atlanta NC Carteret Chicago MN Polk Denver SD Hughes Seattle CA Los Angeles Atlanta FL Palm Beach Philadel MD Cecil Chicago WI Racine Denver MO Perry Austin NM Santa Fe Seattle OR Clackamas Philadel ME Cumberland Seattle AK Sitka City Charleston San Antonio Aurora Providence Victorville Mesa Morehead City East Grand Forks Pierre Los Angeles North Palm Beach Elkton Racine Perryville Santa Fe Portland Portland Sitka Year 1998 1996 1998 1995 1994 1996 1998 1998 1997 1992 1999 1999 1990 1993 1999 1994 1994 1993 Type of Grant Defense Impact Strategy SSED Defense Impact Implementation SSED Defense Impact Implementation SSED Defense Impact Implementation SSED Defense Impact Implementation SSED Defense Impact Implementation SSED Disaster Implementation SSED Disaster Implementation SSED Disaster Strategy SSED Disaster Implementation SSED Econ Adjustment Implementation (reg or disaster) Econ Adjustment Strategy (reg. or disaster) LTED RLF LTED RLF LTED Implement. LTED Develop. Other Implementation SSED Other Implementation SSED EDA Funds $75,000 $4,100,000 $3,750,000 $900,000 $4,500,000 $1,500,000 $237,327 $882,000 $84,502 $3,000,000 $200,000 $70,000 $400,000 $500,000 $300,000 $57,000 $634,230 $46,846
REFERENCES Agranoff, R. and McGuire, M. 1998. The intergovernmental context of local economic development. State and Local Government Review 30 (Fall): 150-164. Agranoff, R. and McGuire, M. 2001. American federalism and the search for models of management. Public Administration Review 61 (November/December): 671-681. Anton, T. 1989. American Federalism & Public Policy. New York: Random House. Conlan, T. 1991. And the beat goes on: Intergovernmental mandates and preemption in an era of deregulation. Publius: The Journal of Federalism 21 (3): 43-57. EDA (2003). http://220.127.116.11/xp/EDAPublic/InvestmentsGrants/Pgmguide.xml O’Toole, L.J. 2000. American Intergovernmental Relations. Washington, D.C.: CQ Press. O’Toole, L.J. 1996. Hollowing the infrastructure: Revolving loan programs and network dynamics in the American states. Journal of Public Administration Research and Theory 6 (2): 225-242. Pressman, J.L. 1975. Federal programs and city politics: The dynamics of the aid process in Oakland. Berkeley: University of California Press. Reese, L.A. and Fasenfest, D. 2003. Planning for development: An evaluation of the Economic Development District planning process. Economic Development Quarterly (17): 264-279. Rosenfeld, R.A. 1979. Local implementation decisions for Community Development Block Grants. Public Administration Review (39): 448-457. Sundquist, J.L. and David, D.W. 1969. Making federalism work: A study of program coordination at the community level. Washington DC: Brookings Institution. Watts, R.L. 1996. Comparing federal systems in the 1990s. Kingston, ON: Institute of Intergovernmental relations, Queens University. Zimmerman, J.F. 1992. Contemporary American federalism: The growth of national power. New York: Praeger.
Economic Development Districts are 323 federally designated areas within states allowing EDA to facilitate strategies for economic development by providing funds for planning and guidelines that help direct the development process. The purposes of EDDs include the provision of technical assistance that fosters the economic development capacities of organizations and the region as a whole, the creation of new capacities for economic development, and the creation and fostering of new organizations for development in the region (for more information on the role of EDDs in EDA programs see Reese and Fasenfest, 2003.).