AFTER THE RIOTS: THE SEARCH FOR ANSWERS : Small-Scale Programs Light Way for Urban Turnaround : Decay: Experience around nation points to no panacea, but shows that, with patience and hard work, the corner can be turned in the inner city.

As national political leaders of all descriptions scramble to formulate a new urban policy, they face public skepticism about whether anything can work to reverse the social disintegration made evident by last week’s riots.

But the experiences of dozens of small publicly and privately financed programs scattered across the country offer a quite different conclusion: No one has invented a magic solution to end urban poverty or to eliminate its most grievous symptoms, but hard and patient work can yield progress even against the most difficult problems.

In eight cities, for example, an organization called Youth Build has enrolled hundreds of young men--some of them former gang members, all of them from impoverished backgrounds--in programs where they learn construction skills while restoring decayed buildings.

In Chicago, the South Shore Bank has spent nearly two decades financing locally based community development efforts that have brought new stability to what was once a badly deteriorating South Side neighborhood.

In cities such as Newark and Camden, N.J., enterprise zones fostered by the state government have provided tax incentives for new investments. State officials claim the program has helped generate 25,000 jobs.

And, although the Bush Administration so far has shown little interest, policy analysts from conservative and liberal groups have developed a host of other suggestions for new approaches to urban problems, including community policing to reduce crime and police-community tensions and “workfare” programs to wean welfare recipients off public assistance.

The programs have a few features in common. One is the need for patience.

The social problems of poor urban neighborhoods--from drugs to welfare dependency to families without fathers--have been building for decades, says Sen. Daniel Patrick Moynihan (D-N.Y.), and those problems will take years to reverse.

“The people who say that nothing works are people who thought (programs) would make a rapid change in behavior patterns that nobody with any experience in the field ever thought would or will happen,” Moynihan says.

The same lesson probably will apply to Los Angeles’ rebuilding effort, says Jon P. Goodman, who heads the program for entrepreneurs at USC.

Turning around the economy of South Los Angeles will take five to 10 years of steady, solid economic growth, Goodman believes. “The real issue is job creation,” she said, “and you do that one job at a time.”

In Chicago, redeveloping the South Shore neighborhood “has been a very long, slow, hard process,” says Linda Schwartz, the public relations and marketing director of the South Shore Bank. “The South Shore is still not as healthy a neighborhood as it could be, but slowly and surely that’s changing.”

The South Shore Bank’s community development efforts began in 1973, when a small group of investors, armed with $800,000 from several foundations and the United Church of Christ, bought the bank and began making loans to neighborhood residents, reversing the process by which larger commercial banks effectively had “redlined” the neighborhood, which is 97% black.

The bank, which charges market rates for its loans and pays competitive interest rates to nearly all its depositors, has concentrated its efforts on rehabilitating multi family housing in the area, and over the years its customers have rehabilitated more than 6,000 units, adding both housing and a core of mostly black entrepreneurs to the neighborhood.

In recent years, the bank’s founders have taken their idea on the road, opening a branch in a more seriously rundown neighborhood on the city’s west side, setting up operations in Kansas City and Michigan and working with a group that has established a rural development bank in southwestern Arkansas. The bank has also helped manage an investment fund designed to spur entrepreneurship in Poland.

Supporters of the bank, particularly probable Democratic presidential nominee Bill Clinton, have suggested federal action to encourage similar organizations to set up shop in other regions, saying the South Shore model has proven an effective way of channeling capital into economically deprived neighborhoods.

J. Eugene Grigsby, an urban planning associate professor at UCLA, suggests another method to move capital into low-income areas. To generate locally owned food stores, major food chains could provide pools of venture capital to get local businessmen up and running, Grigsby suggested. Stores could then be staffed by workers whose incomes would be supplemented by the dividend checks from the stock they would hold in the business.

“People are saying: ‘We don’t own anything. We want to own something,’ ” Grigsby said.

Grigsby’s proposal points to a second factor that analysts say is key to most successful programs: local control and an emphasis on providing residents of poor neighborhoods the tools to help themselves. “Renewal has to be a self-help effort,” says Michael Dear, a professor of geography and urban planning at USC.

Dorothy Stoneman, founder and president of Youth Build USA, emphasizes a similar point. “I’ve been working in inner city neighborhoods since 1964,” she says. “Programs that work are really focused on leadership development within the community.”

Youth Build began in New York but has since expanded operations to Boston, Cleveland, St. Louis, Milwaukee, San Francisco, Indianapolis, and Tallahassee and rural Gadsden County in Florida. Programs typically enroll about 40 young people, generally men, from the ages of 17 to 24, for a year during which they divide their time between school and construction work.

Besides providing housing, the programs in many cases have allowed graduates to go on to construction-trade apprenticeships and jobs. But, even in cases where that does not happen, the program often represents the first time ever that its participants have taken part in activity that provides them with respect and takes seriously their aspirations, Stoneman says.

“Most of what you’re dealing with is really alienation and despair and the dead-end quality of having nowhere to go,” Stoneman says. “That can be fixed.”

So far, however, efforts to gain federal support for the program have failed, in part because of its cost, which can run up to $20,000 per participant plus the cost of the actual housing rehabilitation. Sen. John Kerry (D-Mass.) has been pushing legislation to provide up to $40 million in federal funds to spread the program nationwide, but the Bush Administration so far has refused to sign on to the idea.

Cost is one chief reason why neither conservative nor liberal proposals for new urban policy ideas have found a receptive audience in Washington.

Advocates argue that programs to treat the problems of inner-city poverty cost society far less in the long run than the alternatives--crime, continued social disintegration and the loss of human potential to despair. But in an era of massive federal budget deficits, such arguments have made little headway.

The Administration has shown little interest in domestic policy innovations, and, at least until the riots broke out, congressional Democrats concentrated on protecting existing programs. One proposal Administration officials have pushed involves so-called enterprise zones--areas within cities in which businesses willing to make investments would get tax breaks and other incentives designed to make their ventures more profitable.

Enterprise zones have been a favorite idea of Jack Kemp, Secretary of Housing and Urban Development. But, although Bush has gone along with the idea, he has put little political emphasis behind it, at least until now. Earlier this year, Bush vetoed a bill that would have set up some enterprise zones because the measure also included tax increases for wealthy Americans.

Whether enterprise zones actually would do much good has been a hotly debated question. Two local enterprise zones exist in South Los Angeles, but their effectiveness has been modest at best. One is in Watts, and the other extends south from the Santa Monica Freeway to Martin Luther King Jr. Boulevard, east of the Harbor Freeway.

Local enterprise zones also exist in 37 other states, with New Jersey’s apparently among the most successful. There, businesses investing in enterprise zones gain tax incentives to hire low-income workers and sales tax exemptions for their products. In the absence of federal legislation, however, the businesses remain subject to federal taxes.

A 1989 study by a faculty member at the City University of New York concluded that the New Jersey enterprise zones generated nearly $2 in new taxes for every $1 invested. S. Charles (Gary) Garofalo, head of the New Jersey program, says the roughly $3.7 billion that has been invested in New Jersey’s enterprise zones has helped create 25,000 jobs.

“The Newarks, the Camdens, the Jersey Cities, the Trentons--the proof is the pudding,” Garofalo says.

A leading Democratic champion of the idea, Rep. Charles Rangel (D-N.Y.), whose district includes Harlem, is preparing to resubmit legislation that calls for creation of 35 federal enterprise zones nationwide. “All of a sudden, they are very popular,” said a Rangel aide. The Administration has called for the creation of 50 zones nationwide that would offer tax incentives of up to $250,000 for investors.

By contrast, the Administration has made no proposals on what is probably the most intractable problem of poverty--long-term welfare dependency. Although Vice President Dan Quayle has made speeches calling for welfare reform, the Administration’s only policy has been to promise quick consideration of state plans to begin their own experiments.

Part of the problem is that even conservative proposals for getting welfare recipients into the job market would cost a lot of money.

At the conservative Heritage Foundation, for example, policy analyst Robert Rector has developed a package of welfare changes that he believes would help end welfare dependency. Rector’s plan would require welfare recipients to work in community service jobs and would provide health and tax benefits to low-income working people as an incentive to getting off the welfare rolls.

Even though Rector’s plan also would include steep benefit cuts, his proposal could add billions of dollars to current welfare costs, he said. “What you have to do is change the incentive structure, and that involves both toughness and compassion, and you can’t get very far with just one of those,” he said.