New Economic Development Chief Pledges to Ramp Up Outreach

Alejandra Castillo, the new administrator of the U.S. Economic Development Administration, says communities should expect to see ramped-up engagement and outreach from the agency as it works to manage billions of dollars in grant funding Congress made available under pandemic relief legislation.

“The DNA of EDA has not changed. What has changed and will continue to change is how we engage across the country to make sure that we engage new partners, new stakeholders, as well as communities that have been disenfranchised,” Castillo told Route Fifty in an interview last week. “What you’re going to see is much more intentionality in making sure that we’re reaching the urban, the suburban, the rural areas,” she added.

Castillo was sworn into the job less than a month ago, on Aug. 13. She said that so far she’s met with university presidents and, the National Governors Association and travelled to West Virginia’s coal country. The agency, meanwhile, she said has held about 10 online seminars to provide information to stakeholders on its programs in recent weeks, with over 20,000 participants tuning in.

Big Funding Boost

It’s a pivotal moment for EDA, which describes itself as the only federal agency focused exclusively on economic development. In recent years, the agency has also taken on more of a role in disaster recovery. EDA’s fiscal 2020 budget was around $330 million. But the American Rescue Plan Act sent $3 billion its way and the earlier CARES Act $1.5 billion.

That money is bound for communities across the country to support economic development initiatives and the recovery from the pandemic. Last month, EDA unveiled a suite of six new grant programs that will be used to distribute the ARPA dollars.

An application deadline for one of the programs, the $1 billion Build Back Better Regional Challenge, is coming up on Oct. 19. That initiative will award 20 to 30 regional coalitions grants of $25 million to $75 million, and possibly up to $100 million, to develop “industry clusters.”

“That’s a call to action, in terms of partnerships and regional collaboration,” said Castillo. 

“We’re hoping that we’re going to get some really incredible ideas.”

The other new grant programs will focus on areas like job skills training, assisting communities hit by declines in the coal industry, and helping places that rely on travel, tourism and outdoor recreation rebound from the economic blow of the coronavirus.

Many state and local governments are already handling an unprecedented influx of federal cash that came their way from the $350 billion ARPA program providing direct aid to states and localities. In contrast to that giant program, the EDA money may seem modest. 

But set against federal funding from pre-pandemic times it is anything but. 

For instance, regular appropriations for Community Development Block Grants, a flexible program favored by local leaders, have been in the ballpark of $3.3 billion in recent years. Back around 2015-16, dozens of cities vied for a mere $40 million in federal money as part of the Transportation Department’s Smart City Challenge.

For the shrewd state or locality, the EDA dollars are an added funding stream that can be tapped to support economic development efforts and pandemic recovery, and possibly beefed up further by pairing the money with philanthropic or private sector investments.

‘Saw What Disinvestment Looked Like’

It’s in this context Castillo is taking the helm of EDA, which is housed within the Commerce Department. This is not her first go-round in the federal government. ​​During the Clinton years, she served as a policy analyst for the White House Office of National Drug Control Policy. Then-president Barack Obama appointed her in 2014 as national director of Commerce’s Minority Business Development Agency—she was the first Hispanic woman to lead the agency. 

Castillo also worked for the Commerce Department back in the 2008 time frame, on international trade issues. Just before taking her new EDA post, she was CEO of the nonprofit YWCA USA, one of the nation’s largest groups focused on empowering women.

During her time with the Minority Business Development Agency, Castillo worked with EDA. She said she was eager to get the top job at the agency after Biden was elected.

“I love communities,” Castillo said. 

“The more you travel our country, the more you realize the diversity.” Not just in terms of population, race or ethnicity, she added, “But diversity of what makes communities run and tick and how that economic fabric, how strong it is and sometimes how very fragile it is.”

Castillo described witnessing that fragility growing up in New York City in the 1970s, a rough era for the city. “I saw what disinvestment looked like. When the dollars are not flowing into communities, the infrastructure starts to decay. The opportunities for jobs are not there.”

“All of that has really left a very big impression,” she added.

Castillo’s parents immigrated from the Dominican Republic. Her father, who passed away when she was 13, ran a bodega in the Bronx and her mother an Avon cosmetic products business. 

Their work left an impression also. “Watching my parents as small business owners, what happens to small business owners when the community around you is going through really hard times. The challenges that small business owners have,” she said. “They are leaders themselves. And how do they keep lifting up communities?”

Asked about what she sees as the ingredients for a successful economic development program, Castillo said that having a range of stakeholders involved in planning is key.

She points out, for instance, how women and people of color have been affected disproportionately by the economic fallout from Covid-19, or how discussions about bringing an industry to a region are flawed without having people at the table who can speak to workforce development needs. “You need to bring in diverse voices,” she said.

Castillo also suggested that programs like those that her agency works on have generally been short changed over the years. She noted that when economic development spending in the U.S. is compared to the amounts other Organisation for Economic Co-operation and Development countries spend, “we’re at the bottom of the list.”

“I think EDA has an incredible opportunity, but I also take it as an incredible challenge. How do I lift up the agency so that we can have a much more sustainable existence and not be underfunded,” she added, after referring to the agency's unusual budget boost. “I really hope that this moment in time is not episodic, that it’s not just a one-off.”