Compete and Empower

By , director at the Enterprise Zone Project at the University of Richmond, Va., is visiting professor at The American University in Washington.

ONE of Washington's best-kept secrets will be revealed in the coming weeks as officials at the Departments of Housing and Urban Development (HUD) and Agriculture announce the rules in the national competitions for ``empowerment zones'' and ``enterprise communities.''

After 12 years of Washington wrestling with the enterprise zone concept, Congress and the president finally have agreed to a federal enterprise zone program as part of the budget reconciliation in August. Although designing the legislation to meet deficit-reduction strictures was no mean feat, administration officials (led by Vice President Gore) faced a more daunting task: designing criteria for selecting nine areas to be empowerment zones and 95 localities to be enterprise communities. Currently, hundreds of state-designated enterprise zones in 40 states and probably hundreds of additional communities are interested in federal designation. Although the legislation contains details on eligibility (geography, population, and degree of poverty), there is little guidance on the designation process.

There is a two-year (1994-95) selection window. The secretaries of HUD and Agriculture are to give special attention to plans submitted by state and local governments. Beyond that, there is still an opportunity to craft selection procedures.

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The selection should first give designation to the most deserving localities. Second, it should encourage public-private-community partnerships. Third, states and localities that have been fighting the good economic development and revitalization fight should not be disheartened. Fourth, successes and failures must be monitored. Each of these goals must be addressed by an effective designation strategy.

Much speculation has concerned not those communities in the most dire need, but the six cities that supposedly have the inside track in the empowerment zone sweepstakes. Chicago (``the Rostenkowski Zone,'') New York (the ``Rangel Zone''), and Los Angeles (the ``Rodney King Zone'') are mentioned most often. But tough questions still remain:

* Which neighborhoods will benefit from the zone incentives and government funding?

* Which adjoining or nearby jurisdictions will be asked to join the nomination? And within or even outside the state?

* Can local officials demonstrate that community-based organizations will participate through the entire process?

* Will state authorities allow multiple nominations, or give a blessing to only one area?

It only gets tougher when one looks at other central cities with highly visible pockets of poverty like Cleveland, Dallas, Detroit, Philadelphia, and Washington.

The legislation even creates special subcategories: One empowerment zone is reserved for an urban area that has no city with a population greater than half a million. Places such as Atlanta, Bridgeport, Conn., Miami, and Richmond, Va., are among the cities that meet this criterion. Owing to the efforts of Sen. Bill Bradley (D) of New Jersey, some say Camden, N.J., has a lock on the zone reserved for a distressed area that straddles two states and has a population of less than 50,000 (although dozens of other border cities fit this description).

Farming areas devastated by this year's flood will be sentimental favorites for rural selection. HUD and Agriculture officials may be tempted to use empowerment zones to meet the ``crisis du jour.'' But Congress encourages a choice of high drug-use neighborhoods, former timber-producing areas, or communities hit hard by military base closures.

If Clinton officials give in to such pressure, in the absence of solid commitment to program success by local governments, employers, and residents, the program will be set up to fail.

Much of the states' experience with enterprise zones gets lost in the translation to a federal program that features deeper tax incentives, increased expenditures ($100 million for each zone), and greater media attention. Still, the states do show that the competitive zone designation process can be a wonderful device for encouraging the kinds of public-private joint ventures that drive innovation and revitalization efforts. Because the Clinton administration - through spokesmen such as Paul Dimond (White House), Henry Cisneros and Andrew Cuomo (HUD), and Bob Nash (Agriculture) - has given special emphasis to bottom-up planning and citizen involvement, the federal program promises to stimulate and strengthen public-private-community partnerships.

There is a downside to the competition. Since slots in the first tier are not already committed, the small number of empowerment zones and the reduced incentives available to the enterprise communities have made officials in lower-profile distressed communities skeptical about their selection chances.

There is a simple (and relatively cost-free) solution: The president could instruct federal agencies to give enterprise communities high priority for all federal programs that enhance economic development. President Clinton also could create a third tier of ``zone-eligible areas'' - communities in need that prepare strategic plans but are not chosen in the competition. Zone-eligible areas could receive a mix of enhanced technical assistance, permit waivers, and government program priorities on a small scale.

Finally, the designation process should proceed with an eye toward monitoring results. Many proponents of enterprise zone-type programs have expressed hope that, once a demonstration program works, governments can make those incentives available to benefit businesses, employees, and communities. Local officials interested in zone designation should be asked to provide some data so that observers will have a good read on the economic and social status of the community. Otherwise, lawmakers would be apt either to expand the ``demonstration'' too widely (a la Model Cities) or to kill the idea in its gestation (remember Urban Development Action Grants?).

The residents of America's pockets of urban and rural distress can afford neither of these paths: The first leads to dilution of the incentive package's strength and the second leads to more decades of official neglect. A sensitive designation process followed by program guidance offers the best assurance that empowerment zones and enterprise communities will rekindle hope where despair now reigns. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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