Over the last several decades, the federal government has launched numerous programs aimed at “saving America’s inner cities.” Model Cities, CAP Agencies, Urban Renewal, VISTA and others have focused primarily on housing and social services. All have shown limited success, and are often pointed to as examples of the dangers of addressing such intricate challenges with such huge programs.
The latest effort in this quest – The Empowerment Zone and Enterprise Community Initiative (EZ/EC), administered by HUD (and USDA in rural areas) – focuses on economic development, primarily in the form of tax incentives to businesses willing to work in and with local governments and residents of distressed communities. Out of hundreds of applicants, 137 communities have been chosen in two rounds of funding (1994 and 1998) to share in more than $1.5 billion over 10 years. Urban Empowerment Zones received a total of $100 million each, while rural Zones chosen in the first round got $40 million and those chosen in the second round got $20 million. Enterprise Communities are promised $3 million each.
The funds are accompanied by more than $2.5 billion in tax incentives to participating businesses. A business in an EZ/EC hiring a resident who lives within the same EZ/EC can deduct up to $3,000 from their taxes, for example. Tax-exempt bond financing is also available, and the federal dollars have already helped communities leverage another $10 billion in local and private funds, says Dennis Kane, HUD’s EZ/EC program coordinator.
Beyond the funds, Kane says, the program is unique among federal efforts to find solutions for disinvested communities because of its effort to encourage collaboration among local agencies, participation from residents, and “strategic visions for change.” For a site to receive EZ/EC money, all those with a stake in the targeted communities must play a role in the effort, and the proposed plan must demonstrate that the participants have committed to work together toward long-term sustainable solutions.
Successes and Struggles
Relatively little has been written about the EZ/EC program in the five years since its launch, likely due to the complexity of the program, and because no two sites are similar enough to lend the nationwide effort to a simple overall assessment (though a large-scale, HUD-funded evaluation is due early in 2001). Even the EZ/EC section of HUD’s own usually excellent website was for a long while replete with out of date information and faulty links. What press coverage there has been has tended to be local and focused on the particulars of individual sites’ performance and operation.
An investigation by the Cleveland Plain Dealer in September 1999 found that city’s Empowerment Zone to be falling quite short of the promise many thought it held. Barely one-quarter of the resources allocated over five years had been spent, turnover among initiative staff was high, oversight was limited, and management – which was supposed to be largely in the hands of a Citizens Advisory Board – was gradually being taken over by City Hall.
But the report also found that the $32 million that had been spent was expected to create 1,063 jobs, and that an additional 1,100 people went through training and went on to find work.
A March 1999 report by HUD’s Inspector General found that HUD was not adequately assessing performance of the Zones, nor making an effort to verify the accuracy of the performance reports submitted by the sites themselves. Similar investigations of individual EZ/EC sites in recent years have yielded reports citing examples of funds being misspent, funds spent outside the boundaries of designated areas, and results being misreported.
But such critiques are to be expected in an initiative the size and complexity of EZ/EC, says Kane. What’s most important is that around the country communities are developing strategies at the grassroots level, and thousands of people are finding jobs as a result. “Every Zone has had successes and failures,” says Kane. “This is really an experiment in trying to revitalize communities that have been declining for decades.” The plans and processes need time to mature and develop before any real determination of success or failure is made, he adds, particularly because of the rigorous citizen participation requirements, which often work at odds with a push for rapid results.
Every one of the EZ/EC sites has created or retained jobs, says Kane. While there’s no total number for how many jobs have been created since the program begin, he says the initiative can lay claim to putting “tens of thousands” of people to work, citing 3,000 new jobs in Baltimore, and 2,000 in New York City as examples.
Reporting and tracking such figures are challenging, says Kane, since each site’s EZ/EC plan is part of a larger strategy in its community, so it’s difficult to say exactly which jobs are attributable to which programs. The nature of the economic development work done by each site also makes it hard to track success uniformly, he says. Some sites use EZ/EC money to link people with jobs that already existed, while others use the program’s tax incentives to encourage new or existing businesses to make their home within the community.
“It’s up to the community what types of jobs they want to create,” he stresses. Some sites have focused on finding part time jobs for students, while others have created hundreds of union positions in their neighborhoods. Some offer simple placement services, while others have launched elaborate job training, placement, and retention programs.
Soon after the Detroit, MI Empowerment Zone was designated, jobs did indeed begin to become available, says Maggie DeSantis, executive director of Warren Conner Development Coalition, a Detroit CDC. “We had a broken-down, empty, environmentally poisonous former auto plant, that’s now being rebuilt and the company [Daimler-Chrysler] wants to do neighborhood beautification and hire people from the neighborhood,” she says. “And that’s great.” The lines of the EZ, she says, were drawn with the location of the auto plants in mind.
“Anyone who wanted to call this [the EZ/EC initiative] urban policy was nuts, though,” she adds. “It’s tax breaks for businesses. What we need is a whole range of incentives to change the behavior of corporations, make them accountable to the neighborhoods.” Corporations should work directly with neighborhood residents and other stakeholders to determine what they can bring to the community in which they’re based, suggests DeSantis. Then, any financial incentives or favorable decisions the corporation desires regarding land use should be contingent upon it satisfying its commitment to the community.
The Burlington, VT Enterprise Community program has created just that type of partnership, says Bruce Seifer, Burlington’s assistant director for economic development. “We’ve had an unbelievable community process, and completely wrote the plan based on community feedback.” As for jobs, the EC has created or leveraged funds to create a community technology center that has provided computer literacy skills to more than 1,600 people, build a 150,000 square foot department store employing hundreds of residents, convert an abandoned industrial building into an artists’ incubator with living, working and gallery space for 12 low-income households, and more. They’ve funded programs training women in the building trades, pairing mentors with students to prepare them for employment, and offering a range of funding mechanisms for local businesses.
Having reviewed many of the sites’ plans for a series of early EZ/EC assessments for HUD, David Wright, director of urban studies at the Rockefeller Institute of Government at SUNY Albany, says that most of the plans put a high priority on training and placement activity. “Most of the conversation was that past efforts and current programs didn’t do enough to tailor programs to specific skills for living wage jobs that were available,” he says. Plans he reviewed showed a great deal of direct involvement of employers that had actual jobs they needed to fill, and strategies to provide general employability skills as well as industry-specific skills. Some of the more advanced sites even looked at ancillary services – like transportation and child care – he says. Training youth for jobs, particularly in the construction trade, was another theme at many of the sites.
“Inherently the Empowerment Zone paradigm is paradoxical,” says Wright, because of the place-based focus. “Geographic targeting helps with focus, with community participation goals, and is rooted in a desire for efficient use of resources,” he says. “But the idea of drawing bright red boundaries and focusing resources only within them is inconsistent with what might be best for the people and those areas.” In many cases, targeting efforts based on a geographic area is less important than building linkages and informal networks across borders. The EZ/EC program is very strict about those borders, however, and in some cases next-door neighbors have been treated differently because one was within the Zone and the other was not.
While the focus is on jobs and business opportunities, Kane says that the initiative encourages comprehensive planning efforts that look at all aspects of a community. “Even if you can get someone a job, if it’s a crummy place to live they’re not going to stay there,” he says. Of the range of plans submitted, those that were looked at most favorably were those that looked at a range of impediments to employment – issues like transportation and child care, for example – as well as those that proposed efforts to coordinate service delivery to the families in the communities being served. First time homebuyer programs providing low-cost loans to families who choose to move into the communities are also common among EZ/EC sites, and some have included arts and culture programs. “We’re looking for strategic visions for change” in the plans, he says.
The neighborhoods chosen “have had very little voice in resource allocation,” he explains, and by providing some funds to fill gaps and leverage other resources, the initiative aims to help heighten and sustain that voice.
EZ/EC is also distinguished by its commitment – in principle, at least – to community control of the decision making at each site. Kane calls resident participation the “biggest success” of the EZ/EC program, even among communities that didn’t get grants. “I’ve heard it a hundred times from communities that have applied for funds but didn’t win – even the application process is valuable in that in brings people together to talk about their communities’ future.”
“This is a pathbreaking program for the federal government,” says Kane, because “it’s up to the community to tell us what strategy they’re going to use. We’re not telling them ‘here’s what you’ve got to do to get the money.'” While there’s no formula for how residents should be engaged in the process, HUD wants residents to have a role in the decision making at each site, and Kane says that most sites have followed through on that commitment well. Again, no two are exactly alike, but Kane says that the sites where citizen participation has been the most vigorous have also shown the most success in carrying out their plans.
Wright agrees that HUD made it very clear that the application process as well as the design and implementation of the strategies had to be community-based and bottom-up, and cites examples where residents felt that city government was being overly controlling of an initiative, and HUD intervened to stress the importance of resident power.
“The design of the program really was a concerted effort to get community people involved directly,” says Wright, and most of the sites did engage residents throughout the process, he says. Most followed a pattern of beginning the project as a city-sponsored initiative, holding public meetings, and forming advisory committees and subcommittees made up of residents, CBO representatives, and city government representatives. “Every one of our field associates [conducting research] reported that the level of activity and participation was greater than any other federal programs,” Wright says.
But early levels of participation proved difficult to maintain over the course of the initiatives, says Wright, and while HUD’s application process required sites to describe a proposed governance structure, there was no requirement that those descriptions be followed. As a result, there are a few sites where EZ/EC funds are being used by cities just as they use other federal funds, without any oversight by the residents whose input is supposed to be key.
Another aspect of the program that makes sustaining community participation challenging, Wright points out, is that EZs and ECs are areas based on census tracts with certain criteria relating to poverty and disinvestment, in contrast to most community development efforts, which focus on neighborhoods or communities residents are familiar with. “Nobody knows what census tract they live in,” says Wright. General development trends toward regional and sectoral development that don’t observe political or census boundaries also clash with the program’s requirements.
The application process itself was extremely rigorous in its participation requirements. “Developing the vision brought people out, but asking people for continued participation – tasks like issuing an RFP or a contract – is harder,” says Wright. “The character of continuing community involvement after sites were chosen is a very different kind than what went on before. There are much lower levels of community involvement in the technical work than in the early processes, but there is still some advisory input from residents.”
In Detroit, for example, residents and local organizations fought hard to ensure that residents would make up 60 percent of the governing board of their Empowerment Zone, but had to compromise to include representatives of small businesses in that number, says DeSantis, who was part of the early planning process. “We designed the EZ to not have a legal relation with the City Council, to be independent of the City Government, but when the Mayor and City Council got wind of that it was brought directly under the control of the City Council,” she says. Such political manipulations can undermine resident engagement in these initiatives, DeSantis says, and suggests that stronger guidelines are in order, mandating not just resident involvement but at least some degree of resident control.
The 1995 EZ/EC assessment published by the Rockefeller Institute of Government reported that Detroit’s experience is not unique. Some of the EZ/EC governing bodies in the cities examined consisted of fewer than 10 percent residents, although in others residents represented a majority. Also noted in the study was the fact that “true grassroots empowerment of everyday citizens was far from realized in most cities in the study sample.” Instead, “most citizen participants were savvy and well-seasoned representatives of community groups, neighborhood-based service providers, and civic associations.”
To DeSantis, the EZ/EC initiative was a lot of money and tax breaks that could help some aspects of her community, and “for any community in the shape we’re in to say no or to not try to influence it would be stupid.” But it’s frustrating to see how limited the avenues for resident participation are, she adds, and it’s disappointing to see that it has become just another city agency, beholden to the same political machinery as the rest of the city government.
The resident engagement aspect of the initiative now seems like little more than empty promises, DeSantis says, and as a result, “I don’t get a sense that people in the community feel attached or engaged in the EZ.”
In contrast, Burlington’s EC is controlled almost exclusively by residents, and the process has brought together representatives of the nonprofit, business, and public sectors to collaborate in ways they never had before, says Maria Vaivao, who coordinates Burlington’s EC. “The city had a history of participatory processes, but people and local institutions weren’t really working together – they were vying for the same funding.” Since the EC process brought them together, she says, organizations have started looking at where they were duplicating services and how they can work together. Five youth service providers have formed a network, for example, and now apply for funding together, and the local Boys and Girls’ club was close to having to shut down but was saved thanks to an alliance they formed with the YMCA.
Despite the abuses that have plagued specific sites, the economic development focus of the EZ/EC program seems to have had some success in bringing jobs to where they are most needed. The Clinton administration has requested funds for a third round of EZ/EC funding in the FY2001 budget, and the bipartisan support that the program has enjoyed in the past is likely to continue.
However, to live up to its promise of being a program unique for its resident participation, that participation needs to extend beyond the application process to governance, implementation, and evaluation. If past experience is an indicator, EZ/EC residents will have to rely on their own initiatives to create true “empowerment” zones.
When Communities Stay Involved:
Learning Initiative Evaluates Rural EZ/ECs
By Larry Parachini and Andrew Mott with Susan Rees
To make the participation requirements of EZ/ECs a reality, a project called the Learning Initiative (LI) used what we call Community-based Monitoring, Learning, and Action (CMLA). CMLA includes community monitoring and/or research of targeted government or private sector institutions, policies or practices by poor people ; participatory learning processes to build poor peoples’ research and/or monitoring skills and other capacities, and to involve them in determining strategic goals, objectives and plans; and strategic action directly involving poor people in efforts intended to influence the targeted institutions, policies, or practices.
The Learning Initiative, which ran from 1995-1998 and was administered by the Community Partnership Center at the University of Tennessee, was designed to foster continuing citizen involvement in monitoring, learning, and action in ten rural EZ/EC communities. Funded initially by the U.S. Department of Agriculture (USDA), the Ford Foundation, and the Rural Economic Policy Program of the Aspen Institute, the LI was intended to provide a national assessment for federal officials.
The initiative drew heavily from the traditions of participatory research (see Shelterforce #108) and popular education, including those of the Highlander Center, whose former director was co-director of the Community Partnership Center during the Learning Initiative. The LI design was radically different from traditional evaluations that rely on outside experts which, more often than not, examine and report on the success or failure of a program very late in its implementation or after its completion. It provided a means for community representatives to measure their EZ or EC’s progress and recommend mid-course corrections to the agencies running the program.
Organized into learning teams of between eight and 20 local volunteers, each LI had a part-time paid coordinator. Participants decided which of the EZ/EC program’s local goals were most important to them. Using a flexible evaluation tool designed by the Partnership Center, each team did its own monitoring, analysis, and reporting. Experienced “regional researchers” were available to assist.
There are several examples of the LI’s impact. In Jackson County, Kentucky, the team conducted intensive interviews and attended over 400 EZ meetings as it monitored the program. Along the way, it uncovered numerous questionable, if not corrupt, transactions. A spokesperson for the county’s power structure labeled the initiative’s findings as “not only ignorant, but stupid.” But national observers viewed the report as balanced, and the respected Louisville Courier-Journal took the learning team’s side, editorializing, “Count us among the stupid.”
In McDowell County, West Virginia, the learning team conducted an exhaustive “social capacity audit” to create a baseline for measuring community revitalization. The county’s first ever survey of 15 community sectors, including churches, social service agencies, government institutions, media, business and arts, taught the county it had a lot more going for it than anyone had realized.
One member of the team summarized: “I’ll never again be part of any evaluation performed by an outside consultant. The quality and utility of what we can do on our own – with proper and sufficient assistance as we have had from a person knowledgeable about and committed to participatory research and evaluation – far surpasses any ‘professional’ evaluation I’ve ever seen.”
For more information on CMLA, see Strengthening Community Voices in Policy Reform, available from Center for Community Change, 202-342-0519.