The Kentucky Highlands Empowerment Zone Strategic Plan lists many projects to be carried out throughout the Zone. Most of these projects are local in nature and their implementation is the responsibility of the management body and committees in each county. However, several projects are zone-wide and it is the contractual responsibility of Kentucky Highlands Investment Corporation (KHIC) to manage their progress. A description and update of the KHIC projects are found below.
The Kentucky Highlands Empowerment Zone is using $11 million of Empowerment Zone Funds to expand the available development venture capital in the Zone. Developmental venture capital means recruiting entrepreneurs and existing businesses to start or increase their enterprises. As Lead Entity, Kentucky Highlands Investment Corporation, in cooperation with the Local Coordinator, helps the managers prepare their business plans and then works with the businesses to secure funding for the plan. The Kentucky Highlands Empowerment Zone then invests its development venture capital in gaps or areas that private and public sources are unwilling to lend. These funds can be used to invest in equity, to underwrite other lenders or to support investors. The Kentucky Highlands Empowerment Zone can provide working capital to area businesses by providing accounts receivable and inventory financing to manufacturing operations.
In order to maximize local input, a Loan Review Committee has been created to direct this fund. The Development Venture Capital Fund Loan Review Committee consists of eleven members, eight of whom are zone residents. The remaining three members sit on the Board of Directors of the Lead Entity, Kentucky Highlands Investment Corporation (KHIC). It is the responsibility of the Loan Review Committee to approve or turn down all investments of the Development Venture Capital Fund. The KHIC staff prepares all applications and services investments when made, but the committee makes all investment decisions. To date, the Fund has obligated $5,610,000 in Empowerment Zone funds in participation with $38,603,412 of additional capital in nine new manufacturing enterprises. These new ventures have already created 250 jobs, with another 1,257 committed. Included in this amount is the first $150,000 of a total $175,000 investment in the Central Appalachian Peoples Federal Credit Union which has allowed them to open a branch in Jackson County with over 300 members already.
A summary of the investments committed to date through the
Development Venture Capital Fund include:
--Specialty Plastic Products, McKee..................175
Employees
--Snow Pallet , Inc., Clinton County.......................4
Employees
--Jackson, Co. Rehabilitation Ind.........................31
Employees
--Fantasy Yachts Co., Wayne County..................70 Employees
--BMA Manufacturing, Wayne County.................16 Employees
--Cagle's, Inc., Clinton County ...................... 1,000
Employees
--Thoroughbred Cruisers, Inc., Clinton County.....60 Employees
--Clinton County Concrete, Inc., Clinton County....5 Employees
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The Alternative Crop Venture Fund is managed by a twenty-person Loan Review Committee, fourteen of whom are Empowerment Zone residents. The balance of the membership is comprised of Extension Service Agents or similar partners. The goal of this initiative is to encourage KHEZ farmers to experiment with new crops and become less dependent on tobacco. In order to be eligible, the crop or farming method must be new to the farmer. The program offers a loan up to $2,500 per year per farm that must be matched with $2,500. The loan becomes a grant if the experiment fails. Regardless of success, the farmers are required to share information for use by other producers. To date, the Alternative Crop Venture Fund has approved sixteen loans to zone farmers totaling $33,500, and closed twelve. Eight additional loans are planned for this year.
The Kentucky Highlands Empowerment Zone participated with Monticello Banking Company to extend a $1,000,000 line of credit to the Cumberland Farm Products, Inc., a farm cooperative based in Wayne County. This investment allowed farmers to receive payments for their crops much sooner than in the past and gave them increased capacity. Membership in the cooperative requires payment of a $5 annual fee. The loan was completely repaid during 1995 and was again extended this growing season. The cooperative was able to increase their membership by 12% and open a branch for Jackson County with 20 new members.
The second portion of this project is to provide low-interest loans to farmers who are members of the cooperative. The Kentucky Highlands Empowerment Zone will participate with a bank to provide up to $5,000 in financing (or 50% of the project cost) at 5.5% interest to zone farmers. The bank will provide the balance of the financing. Almost any farm related project is eligible.
With the support of the U.S. Department of Agriculture, six AmeriCorps members served the Kentucky Highlands Empowerment Zone plus 13 addtional counties of Southeastern Kentucky during the "Summer of Gleaning". The AmeriCorps members worked with local farm cooperatives, farmers, food processors and non-profit organizations to help provide food to needy families. The emphasis was to "glean" or recover fresh fruits and vegetables which would otherwise be wasted and distribute them to local food banks and families in need. Starting in mid-June when the project began, the Members gathered more than 60,000 pounds of food and distributed it to 2,000 families. Partners in the project included Cumberland Farm Products Cooperative, Wal-Mart Distibution Center (London), Flowers Industries, Gallien Farms in Shelbyville, the Mennonite farm community in Casey County and individual farmers. Food that was distributed to date includes green beans, cantaloupes, cabbage, tomatoes, peppers, corn and baked products.
Jerry Rickett, President/CEO of Kentucky Highlands Investment Corporation, the Lead Entity for the Kentucky Highlands Empowerment Zone has been named a recipient of the first Governor's Economic Development Leadership Award by Kentucky Governor Paul E. Patton. The award honors individuals for their dedication to the improvements in economic opportunities for Kentuckians in through their professional and private lives. The recipients were selected by the independent Southern Economic Development Council in Atlanta, Georgia. The four honorees were featured at a November 7, 1996 banquet hosted by Governor Patton.
Between May 7-11, 1996 the CyberEd truck made its first visit to a rural Empowerment Zone, initially stopping at the Jackson County High School on May 8th with a two-day stop at the Clinton County High School on May 10th and May 11th. CyberEd, a portable classroom sponsored by MCI and others, is designed to expose schools to educational possibilities of the Internet and distance learning classrooms. In addition to the two-hour training sessions for students, parents, teachers and administrators, a Educational Technology Round Table was held in each county. These Round Tables, each attended by 30-40 persons, set local goals and then decided to work jointly to maximize the efforts of the three counties.
As a result of the visit, Jackson County Schools conducted a volunteer effort on July 16-17, 1996 to pull more than 8.5 miles of computer network cable to each of the 27 classrooms at the Jackson County Middle School. The People's Rural Telephone Cooperative and C&W Cable Television were major contributors to this effort. The first floor of the Jackson County High School was also wired by volunteers during the Fall 1996. The plan is to completely network the remaining four schools in Jackson County on a volunteer basis before the end of the upcoming school year.
In accordance with President Clinton's Executive Order 12999, several federal agencies have agreed to donate surplus computer equipment to Empowerment Zone schools. On August 27, 1996 the Zone received 45 computers donated by the U.S. Department of Agriculture. Also the Internal Revenue Service, the Small Business Administration - Louisville District Office and the Lockheed-Martin Uranium Enrichment Plant at Paducah have made donation offers.
Under an agreement among the KHEZ, the Small Business Administration, and the Center for Rural Development have opened a SBA One Stop Capital Shop (OSCS) to serve the Kentucky Highlands Empowerment Zone and the McCreary County Enterprise Community. The OSCS, located within the Center for Rural Development at Somerset, was opened June 15, 1996. Ms. Kay Stucker, an SBA employee from Wyoming transfered to Somerset to manage the initiative. As part of this project, each county has been provided a computer with a complete SBA business library in the data base to assist businesses.
In cooperation with the Kentucky Cabinet for Economic Development, the Kentucky Highlands Empowerment Zone will host a seminar on securing contracts with the federal and state goverment. The sesssion will originate from the Kentucky Highlands office building in London and will be broadcast to The Center for Rural Development in Somerset. The focus of the seminar will be on how to take advantage of the new federal regulations benefitting EZ businesses, how to interact with the federal Electronic Data Interchange (EDI), how the Federal Streamlining Act (FASA) works, and how to utilize the Kentucky Vendor Information Program (VIP). The training will be held on Wednesday, February 26, 1997 and last from 8:30 a.m. to 12:30 p.m. (EST). There is a $10 registration fee.
The Kentucky Highlands Empowerment Zone has agreed to a $10,500 contract with Kentucky State University to put on a grantsmanship workshop for the three Empowerment Zone counties March 1 and 8, 1997. The program will be conducted via two video-conference workshops each from 10:00 a.m. to 4:30 p.m. (EST). The interactive video conference room at the Clinton County High School and at Kentucky Highlands Investment Corporation will be the training sites. Participants will be provided a training manual and are eligible for Continuing Education Units (CEUs). The training is free to all participants.
An advertisement promoting the Kentucky Highlands Empowerment Zone as an industrial location is appearing in the August/September issue of Plants Parks & Sites. The magazine is geared to businesses considering expansion or relocation.
The Kentucky Highlands Empowerment Zone has made a $175,000 equity award to the Central Appalachian People's Federal Credit Union to assist them in opening a branch in Jackson County. The credit union provides alternative affordable financial services to low-income individuals. They also provide financial counseling, consumer education and a cooperative philosophy to their membership. The EZ funds are being used to finance start-up operations ($75,000) and for equity ($100,000). The Credit Union branch opened in late July 1996 and is under the direction of a local Advisory Council. Mr. Jim Rowland, former President/CEO of the Bank of Williamsburg (Kentucky), began work on May 1, 1996 as Manager of the credit union branch. To date, the Credit Union has 300 new members from Jackson County. The credit union's annual meeting was held on September 26, 1996.
Kentucky Highlands Investment Corporation was awarded a $45,140 grant from the Appalachian Regional Commission to conduct Leadership Training and Strategic Vision Building Workshops for Empowerment Zone residents. The grant, matched by $11,285 local funds, is providing training to 110 Zone residents on how to work together and take control and responsibility of the project. The training is being conducted by The Pacific Institute over 5 days during two sessions. The effort is directed at groups that are not used to or comfortable with being in charge. Thirty-one persons in Jackson County completed the first three days of the initial training in early July and the second portion on August 5-6, 1996. Twenty-five persons completed the program for Wayne County, held July 22-24, 1996. The second phase was held on September 10-11, 1996. The training in Clinton County was held August 5-7, 1996 with more than thirty persons in the program. The second phase in Clinton County is scheduled for October 29-30, 1996. All sessions were free and open to the public.
As a follow up to the CyberEd Truck visit, the school systems in the Kentucky Highlands Empowerment Zone have united with several other interested parties to form the Southern Educational Empowerment Consortium. Included in this effort and signers of the consortium agreement are the Appalachian Rural Systemic Initiative, Kentucky Highlands Investment Corporation, The Center for Rural Development, Somerset Community College, Clinton County Schools, Jackson County Schools, McCreary County Schools (an Enterprise Community), Monticello Independent Schools, Wayne County Schools, the Oneida School District and Scott County Schools in Tennessee (both Enterprise Community schools).
The consortium was formed to strengthen communications between institutions, to offer programs which promote economic development, to develop regional resources for better educational services and to devise beneficial strategies for serving students and teachers.
The group has begun programs and in August 1996 was awarded $218,000 from the U.S. Department of Education's program for Math and Science Equipment.
Kentucky Highlands Investment Corporation, as Lead Entity, has been awarded jointly with the Kentucky Center for Rural Development, a $396,578 grant by the National Telecommunications and Information Administration (NTIA) for Phase I development of an interactive information network in the Zone. The funds, along with $563,400 in other proceeds, have been used to construct three interactive classrooms, create two computer training centers and install T-1 lines. The KHEZ has already developed a ten-program schedule for initial system use. The system became operational on June 15, 1996.
The Kentucky Highlands Empowerment Zone has been the subject of several evaluations from university-sponsored teams and federal evaluators. The University of Kentucky Appalachian Center, under a subcontract from the University of Tennessee, is completing Phase 2 of their evaluation. This phase focusses on Jackson County and uses a Local Learning Team to undertake the monitoring. A project director, Ms. Cathy Howell, has been hired who reports directly to the University of Kentucky. Ms. Howell has been very active and reports that she has attended 452 public meetings on the Empowerment Zone in Jackson County since April 1, 1996. The Team has not issued their Phase 2 findings to date but expects to do so in the Spring 1997. The Phase 1 report was completed in late 1995.
On May 23-24, 1996, an evaluator from the North Central Regional Center for Rural Development at Iowa State University visited with representatives from the Zone in Lexington and made a field trip to Jackson County. No report has been forwarded from this visit.
The Chapin Hall Center for Children at the University of Chicago is also conducting a study on the governance in the Empowerment Zone program sponsored by the Annie E. Casey Foundation. A preliminary report was completed in Fall 1996.
In addition to the above, the Kentucky Highlands Empowerment Zone was visited by the USDA Office of Inspector General for more than one week in April 1996 and by representatives of the General Accounting Office for several days in June 1996.
Kentucky Highlands Investment Corporation received a four-year grant award from the Local Initiative Support Corporation (LISC) for capacity building to provide services within the Empowerment Zone territory. In addition, this designation allows KHIC to participate with LISC in economic development and housing projects in the Zone.
Kentucky Highlands Investment Corporation has been designated by the U.S. Department of Housing and Urban Development as a Tax Credit CDC. The designation allows KHIC to raise capital up to $2 million for community development projects from private donors. In return these donors receive a 5% tax credit per year for ten years because of their donation.
January 23, 1997......Economic Development Cabinet Tour of
Empowerment Zone, 9:00-6:00 p.m., Jackson, Wayne & Clinton
Counties
January 28, 1997......EZ Steering Committee Meeting, London at
12:00 p.m.
February 26, 1997.....Empowerment Zone Contracting: Wired for
Success, London & Somerset, 8:30-12:30 p.m.
March 1 & 8, 1997..Empowerment Zone Grantsmanship Training,
Albany and London, 10:00 a.m. - 4:00 p.m. (EST)
Send comments and mail to Kentucky Highlands Investment Corporation
kentucky@www.ezec.gov