Chicago Spars Over $100 Million Zones

WHEN President Clinton announced last December that Chicago's impoverished South Side would become an ''Empowerment Zone,'' longtime resident Murphy Hughes took him seriously.

''I think I can be a tremendous spark plug for the Empowerment Zone,'' Mr. Hughes says from the small, street-front accounting firm he runs on 43rd Street. The program, approved by Congress last year, offers cash incentives and tax breaks aimed at promoting jobs, business, education and safety in the inner city over the next 10 years. ''I really hope the city takes my ideas and allows me to get involved,'' Hughes says.

But six months after Clinton's announcement, Hughes, the chairman of his neighborhood block club, is unsure what influence, if any, he will have over the Chicago zone or its $100 million in flexible federal grants. ''That's the catch. ''We don't even know who's going to be running the zone.''

The uncertainty of South Side residents like Hughes raises a vital question about the nation's first major bottom-up urban development initiative since the 1970s: How much authority over the six, federally designated urban zones will cities delegate to residents like Hughes? Or, simply put, who will the zones ''empower?''

Last year, six cities -- Chicago, New York, Detroit, Atlanta, Philadelphia/Camden, N.J., and Baltimore -- were selected to receive a total of more than $1.4 billion. (Two other cities, Cleveland and Los Angeles, will receive $125 million and $90 million respectively as Supplemental Empowerment Zones.)

But now the cities are scrambling to set up governance bodies and concrete program goals for the zones by June 30, the target date set by the federal government for signing over the $100 million grants.

Experts say the zone program is the most comprehensive urban-policy initiative since the 1978 Urban Development Action Grants, and the first to stress community involvement since the 1965 Model Cities program. Moreover, they say, it could be the last such program for years.

''Major urban-policy initiatives are extremely unlikely under the Republican-controlled Congress'' with the trend of budget austerity and devolving programs to the states, says Chris Walker, director of community and economic development at the Urban Institute in Washington.

Taken together, the zones constitute a major test of the administration's goal of ''reinventing'' government by making individual citizens the key agents for alleviating inner-city poverty and crime and bringing about grass-roots urban renewal. Unemployment rates average 20 percent and poverty rates 45 percent in the zones.

''This is about getting people who are traditionally beneficiaries to be real stakeholders who design the solutions for their communities,'' says Wanda White, a South Side community organizer and a member of the interim council that put together Chicago's bid for zone status.

Ironically, however, the entanglement of the zones in local political squabbles could hamper progress -- not only for Clinton's empowerment initiative, but for a whole range of federal programs that the GOP-led Congress seeks to devolve to local governments.

In each locality, a tug of war between community activists and city officials is determining how zones are run -- with dramatically different results. In Chicago, for example, Mayor Richard Daley and the City Council have angered community activists by seeking to control zone funding and projects while granting residents a strictly advisory role.

In Philadelphia, however, the city has stepped aside to allow residents to elect community boards to run the zone. The boards are deciding what projects to fund according to goals set down in a community-inspired strategic plan. The mayor cannot revise projects; he can veto them only if they contradict the strategic plan.

The city is ''administering'' but not ''controlling'' the funds, says Donna Cooper, director of the Philadelphia mayor's office of community services.

While no other city has held zone-wide elections, Detroit, Atlanta, and New York have all guaranteed varying degrees of community representation on the zones' governance bodies while granting limited veto powers to city hall. Still, officials in all three cities said in interviews that these arrangements have not come easily.

But discord over the zone has been especially fierce in Chicago. This spring, community activists pushing for elections to decide who runs the zone have sparred with elected City Council members and other officials apparently worried about protecting their turf.

Tensions flared in mid-May when the City Council's finance committee passed an ordinance granting Mayor Daley and the City Council sweeping powers over the zone. Under the ordinance, community representatives are limited to serving on a new advisory body, a permanent, 39-seat coordinating council of which 37 members are appointed by Daley. The permanent council would replace the interim body of community organizers, which helped Chicago in applying for zone status.

Community organizers criticized the ordinance as a ''power grab'' by the city.

''They are basically telling people who have worked on this a long time 'You can go home now, we'll take over from here,''' says Pat Dowell Cerasoli, head of a South Side community organization. ''But for this to be successful you have to have people at the local level working the bugs out and getting the program implemented.''

Backing the community, US Rep. Bobby Rush (D) of Illinois, whose district includes the zone's South Side, asked Housing and Urban Development (HUD) Secretary Henry Cisneros in a May 16 letter to delay the transfer of funds to Chicago until the community becomes a ''full partner'' in the zone.

Chicago officials say community demands for a powerful voice in the zone are unrealistic.

''Local people thought they could secede and create their own government,'' says Chicago housing commissioner Marina Carrott. ''Chicago is governed by a mayor and aldermen who must stand for reelection. It's not the intention of the federal government to let someone usurp that authority.''

Officials contend, moreover, that the law necessitates a leading role for the city council. ''The bottom line is the local government has to be accountable for the funds,'' says Beth White, manager of the Chicago zone and assistant commissioner for Planning and Development.

HUD officials indicated that Secretary Cisneros would not intervene in the Chicago dispute. As one anonymous HUD official put it: ''We're trying to bounce this back to the local level and stay out of the middle of the fight.''

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