Ronald Wilder sees a 'gold mine' just around the corner
Chillicothe, Mo. — RIGHT now it doesn't look like much - a junkyard, a soybean field, an empty mobile-home factory, and a few small manufacturing plants. But as Ronald Wilder hops into his blue-and-white pickup truck to bounce down the rough roads of this north Missouri town, his eye is on the future and the jobs he hopes will come here one day.
''Really your big advantage here is the tax abatement,'' says Mr. Wilder, president of the Chillicothe Industrial Development Corporation.
Indeed, as far as tax abatement goes, the industrial area is seen by Wilder and other local leaders as a potential gold mine.
Chillicothe is just one of 400 communities across the United States (including more than a dozen in Missouri) with its very own enterprise zone.
By design, these state-designated zones are in distressed urban pockets.
The zones are supposed to revive an area by attracting new businesses while encouraging old ones to expand, usually by way of tax and regulatory relief.
Chillicothe Mayor Robert Posch, who has on his desk the still-fresh letter from the state authorizing the enterprise zone, explains that this largely agricultural community of 10,000 just has not been attracting the industry it needs.
In the off-season, local industry provides work for farmers, full-time work for their wives - and jobs to keep more young people from leaving town, Mr. Posch says.
''It may sound selfish, but you've got to be able to compete,'' he says. ''Jobs are No. 1. If we have jobs, people have money and pay taxes. That's the name of the game to keep a community healthy.''
Louanne Danner, vice-president of the local chamber of commerce, agrees.
''When all things are pretty well equal, an enterprise zone gives a person another reason to consider Chillicothe over another community,'' Ms. Danner says.
''There are a thousand communities in Missouri, and it takes a while to get your name at the top of the list. If you have an enterprise zone, it sort of sets you apart.''
It was Ronald Reagan, coming into the presidency in 1981, who was the main champion of enterprise zones.
Yet it has been states, not the federal government, that have taken the lead on an idea borrowed from Great Britain.
Within the last three years 23 states have passed legislation authorizing enterprise zones. Pennsylvania designates them under an existing administrative procedure.
The mix of incentives varies. A few states, such as Maryland and Connecticut, offer venture-capital loans. Pennsylvania offers no special tax incentives, but it targets available government assistance and other help to companies choosing to locate in the zones.
Experts insist that what appeals to site locators in one area may not appeal in another.
''If the big complaint is that property taxes are too high, just creating that incentive can be enough,'' notes Michael Allan Wolf, an assistant professor of law at Oklahoma City University.''There has been a lot of experimentation,'' he says.
Much of the scurrying by states was an effort to be ready to be on the receiving end when federal enterprise zone legislation eventually passed. Though the concept technically has strong bipartisan support and has passed the US Senate twice, it has never quite made it at the federal level.
Most state and local leaders with an interest in enterprise zones say federal participation would make a mammoth difference in promoting their towns, since US taxes take the largest bite from most businesses.
''We pray for federal enterprise zones every night,'' insists Pat Salmon, executive director of Chicago's Back of the Yards Council, a group working hard to restore economic activity in an enterprise zone that covers Chicago's now largely abandoned stockyards.
''Our best guess is that the quality and quantity of federal benefits would help the average state by a 10 to 1 ratio,'' says Stuart C. Sloame, a deputy assistant secretary with the US Department of Housing and Urban Development (HUD).
Mr. Sloame and other proponents of federal zones hope that 1985 will be the year that makes the difference.
''I have definitely noticed an increased interest on the part of the Democrats to get something moving,'' notes Richard Cowden of the Washington-based Sabre Foundation, another group closely following enterprise zone progress.
In a survey for the foundation last year of the nine states that then had authorized zones, Mr. Cowden determined that some 20,000 jobs had been created or saved.
''We thought that was pretty good,'' he says. Those communities that fared best in jobs and investment tended to be those that competed for the honor of having a zone as well as offering other incentives or improvements.
The zone in Chillicothe, for instance, although only three months old, offers reduced local property taxes for new and expanding businesses. So far, according to Louanne Danner, a new glove manufacturing company and a small tool-and-die company have moved into the new zone.
Most who work with state enterprise zones say their chief advantage is as a marketing tool. ''We're finding the zones a successful tool, but only if communities go out there and make them work,'' says Mike Woelffer, director of the Illinois Department of Commerce and Community Affairs, which watches over progress in the 20 zones designated so far in Illinois.
''The zones are a focus for development - they encourage people to call you, '' agrees Lynn Cunningham, executive director of the South Chicago Development Commission, in the Chicago steel mill area where unemployment has recently been as high as 35 percent.
During a recent tour of two Chicago enterprise zones for HUD officials and reporters, Pat Salmon of the Back of the Yards Council pointed to several vacant buildings, a few of which were soon to be taken over by a Boston asbestos-removal firm and a suburban Chicago food distributor. The territory around the stockyards lost 40,000 jobs during the 1950s and '60s.
To make moving to the area more appealing, the council has been working closely with Conrail to improve local rail service and upgrade the track. And as Tom Speck, vice-president of Chicago Sweetners Inc., tells it, that rail service was a vital part of the package that eventually persuaded his firm to move into the city from suburban Hillside, Ill.
''We looked everywhere,'' he says. ''The fact that this is an enterprise zone is not an overwhelming advantage, but it is a definite plus. It should keep the cost of business a little lower.''
But in the eyes of some experts, enterprise zones are more valuable to keep existing industries intact than to attract new companies. The zone established in Chicago's Back of the Yards neighborhood is cited by Spiegel Inc., the mail-order firm, as a key factor in its decision to stay put and expand at its present location. In so doing, Spiegel kept 1,900 jobs in the community and expects to add more.