Time to live up to the hype - business opportunities through the Empowerment Zones and Enterprise Communities Program for poor urban areas

Black Enterprise, June, 1994 by Fonda Marie Lloyd

The multibillion dollar federal Empowerment Zones and Enterprise Communities Program is being touted as a holistic approach to revitalizing economically poor areas. The zones, which functioned on a state-by-state level during the Republican reign, are now a critical element of the Clinton administration's redevelopment plan.

State agencies around the country are preparing to submit plans this month to federal agencies. But many critics wonder if the designated zones will deliver what they promise in terms of jobs and business opportunities, especially for blacks. (See "Will Clinton's Urban Policy Program Really Work?" BE Board of Economists Report, this issue.)

The 10-year designated zones are expected to be more effective than earlier versions because of the community-based approach to strategic planning that's a part of the application, says Michael Savage, deputy director of HUD's Office of Economic Development.

The applications are due by June 30 and the nominations are expected to be announced this fall. Federal agencies anticipate at least 500 applications for the much-coveted six urban and three rural spots.

The competition has been so fierce in New York City, for instance, that congressman Charles B. Rangel (D-NY) had been at odds with Mayor Rudolph Giuliani over where the zone should be.

Rangel has been a chief sponsor of empowerment zones and wants one in Harlem. Giuliani originally supported the idea, but later endorsed an empowerment zone that included portions of Harlem and the South Bronx. The $100 million plan targets Central and East Harlem, Washington Heights and a small part of the South Bronx.

At stake is $100 million each in federal funds for selected urban zones over two years, and $40 million each for selected rural zones. This will pay for social programs ranging from training to drug counseling. Businesses in the area will be eligible for tax incentives and depreciation write-offs.

Tax incentives alone are not enough to lure black or white business into the enterprise zones, says Dr. Glenda Glover, founder of the National Center for Enterprise Zone Research. Black firms need access to capital in order to relocate, as well as solid accounting and management support to stay alive. Otherwise, there may be a repeat of a national trend where only 5.3% of firms within the prior established zones are minority owned, says Glover.

For major corporations looking at enterprise zones, their primary concerns are a trained workforce and safety of employees, says Glover.

"We ought not waste our time trying to attract them [major firms] to inner cities," says Dr. Edward D. Irons, dean of the school of business at Clark Atlanta University and a BE Board of Economists member. "In the last 10 years they have been the net destroyer of jobs.... New jobs are created by smaller firms." Irons believes it will be easier to attract smaller firms with the right packages set up within the strategic plan.