Steve Thompson (202) 720-2446
sathomps@rdmail.rural.usda.gov
Dan Campbell (202) 720-6483
dan.campbell@usda.gov
WASHINGTON, April 19, 2000--Agriculture Under Secretary Jill Long Thompson today praised the Kentucky Highlands Empowerment Zone for initiating a "revolutionary new tool" for rural development.
"In a few short years, the Kentucky Highlands area has seen a surge of economic growth, transforming its unemployment rate from one of the highest in the state to one below the national average," said Long Thompson, who heads USDA's Rural Development mission area. "These gains are partly the result of a revolutionary new tool for promoting rural development in struggling communities: a venture capital fund that not only provides funds for new and expanding businesses, but actually participates in the ventures as a part-owner. It is proving that investing in rural America can reap big dividends in increased prosperity."
The venture capital fund established by the Kentucky Highlands Empowerment Zone invests in promising business start-up operations and expansions, taking an equity capital position in return. Using $11 million in funds from a U.S. Department of Health and Human Services (HHS) Social Services block grant, Kentucky Highlands has financed two yacht-building businesses, a specialty plastics manufacturing company and other light industry.
The Empowerment Zone also provides farm loans to increase productivity and helps finance necessary community facilities, such as youth activity centers. To address falling incomes suffered by tobacco farmers, its Alternative Crop Fund makes interest-free loans to farmers to develop alternative non-tobacco crops.
Empowerment zones in rural areas are designated by USDA Rural Development under President Clinton's Empowerment program. The designation makes them eligible for special federal economic and program incentives, including tax breaks for businesses locating there and grant funds for development projects. Designations are made through a competitive application process; programs run for 10 years. Empowerment Zone grants are administered by local organizations.
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