Enterprise zones: coming urban-aid experiment

A retail shopping strip, perhaps a small factory, or light industry plopped down in the midst of a "bombed out" neighborhood flush with high unemployment, vandalism, and crime may become the Reagan administration's "economic pie from the sky" for poor people in urban communities.

Due to come before Congress soon is the so-called urban enterprise zone, as proposed in a revised piece of legislation offered jointly by two New York congressmen, conservative Republican Jack Kemp and activist Democrat Robert Garcia.

Originally submitted to Congress in 1980, but not acted upon, Kemp- Garcia (really the Urban Jobs and Enterprise Zone Bill) is undergoing a thorough change before its sponsors reintroduce it to Capitol Hill. It is expected to pass, and if successfully implemented it could solve some major problems of US cities.

The enterprise zone idea -- borrowed from the United Kingdom, where it is scheduled to begin operation in 11 selected areas this year -- encourages business and industry to operate in selected depressed areas in cities.

Kemp-Garcia would seek to attract business participation through various concessions on federal taxes, business regulations, and wage supports. The bill would encourage cities and local communities to offer lures such as zoning concessions, reduced property taxes, and public services -- especially security, to protect the area from vandalism, burglary, and other crimes.

It also would seek to raise the status of the residents of prospective neighborhoods -- usually poor whites, blacks, and Hispanics -- to that of people with a future through jobs or training leading to employment.

Reshaping Kemp-Garcia has become a tedious matter, a process that could delay final passage of enterprise-zone legislation until early 1982.

"Our new bill will be completely revamped," says Mary McConnell, legislative assistant to Congressman Kemp. "We are reviewing comments, new information, and fresh ideas on the subject. We have received an amazing number of position papers. When we put it all together, we shall submit a new bill."

Some planners warn, however, that Kemp-Garcia is not a cure-all for urban ills. "The urban enterprise zone idea has merits, but can it alone be the . . . panacea for our nation's distressed cities?" asked Richard T. Anderson, president of the American Planning Association (APA), in a recent address before the group's national convention in Boston.

"It is ironic," he said, "that enterprise zones may be virtually the only new game in town, when it is clear that urban revitalization will require a much more comprehensive approach."

Specialists in urban planning and economics see enterprise zones as a "good idea" yet to be tested. Conferences on such zones have offered varied ideas:

* The key to new firms and small business, the sector that creates the most new jobs, is the amount of money available. Such ventures require start-up capital, improvement loans, and a steady cash flow. A "loss reserve equal to 20 percent of the invested capital" is desirable for enterprise zone businesses, says Paul Pryde, president of Janus Associates, a Washington consulting firm specializing in community investment.

* Tangential issues, especially social issues, could stall such enterprise zones and should not be stressed in related legislation. Speakers at the APA Boston workshop said the legislation instead should aim at boosting all kinds of business enterprise and enlist the aid of large firms as "big brothers."

* The first enterprise zones ought to be pilot projects.

Britain is finally establishing its 11 zones two years after passage of legislation. But the British are not prescribing formula solutions.

For example, two of the zones, Clydebank, including a strip of Glasgow, which it borders, and Speke, in Liverpool, have similarities -- about 700 acres, large , deserted factories, alarming unemployment rates (20 percent in Clydebank and 16.1 percent in Speke), and red- tape roadblocks.

But they differ in approach. With a vacant Singer plant that once employed 18,000 people and built ships -- including the "Queens" Mary, Elizabeth, and Elizabeth II -- and sewing machines, Clydebank has benefited from a task force that recruited 11 firms before it was declared a zone and from local support.

Speke, beset by political issues, seeks a "serviceable airport," a speeded-up political process, and more business commitments.

American expectations vary. Said Judith E. Ludwin, director of a February conference held by the National Urban Coalition in Washington:

"As an experiment, the enterprise zone is a good idea. It is difficult to predict the success of this untried venture. Our main concern is compatability between people and the jobs generated, whether residents have the needed skils or can be trained to fill jobs offered, whether gentrification could thwart the zone idea's goals. And we hope the enabling legislation will not be cluttered with social and noneconomic issues."

Another view is offered by Margaret Bush Wilson, board chairman of the National Association for the Advancement of Colored People (NAACP). Emphasizing economic parity as the basic goal of any enterprise zone system, she proposes homesteading and "shopsteading" as projects to provide housing for low-income families and to offer business opportunities to minorities.

A healthy fiscal climate will draw the financial community to invest in the enterprise zone, says the First National Bank of Boston in its "Economic Review" newsletter summary of a bank seminar on enterprise zones. Participants included Sen. John H. Chafee (R) of Rhode Island, who will submit the Kemp-Garcia Bill to the Senate.

Mayor William Donald Schaeffer (D) of Baltimore told the bank seminar a zone plan must be "simple, clean, and uncomplicated by fixed rules and regulations." Nor should this proposal cover up dismantling of current urban programs such as UDAG (Urban Development Action Grants), he said.