Baltimore Enterprise Zone Has Defenders and Critics : Economy: The effort has created jobs in the inner city, but they aren’t necessarily going to area residents.

When Jeffrey Korber bought the abandoned discotheque from the city in 1986, he knew his work was cut out for him.

“It was a wreck,” said the owner of Design Form, a custom cabinet and wood product manufacturer. “The roof was bad. I had bats in here. No heat, no power, no lights.”

But low-cost financing and tax breaks helped persuade Korber to move his business from a Baltimore suburb to the Park Circle enterprise zone in the heart of the city.

As America looks for ways to combat urban blight after the riots in Los Angeles this spring, politicians from both parties are advocating using federal enterprise zones to coax companies into the cities to create jobs for the underclass.

President Bush has proposed spending $1.9 billion over the next five years to create 50 enterprise zones where both investors and employees would be eligible for tax benefits.

Thirty-eight states already have set up their own enterprise zones, and Baltimore’s Park Circle is frequently cited as one of the success stories.

Ronald Reagan visited the 49-acre industrial park when he was President. Housing and Urban Development Secretary Jack Kemp also came to sing its praises.

“We consider it a success,” said Robin Mills, enterprise zone administrator for the city of Baltimore.

Largely abandoned buildings and empty lots back in 1982, Park Circle is home to 60 companies that employ 1,400. The centerpiece of the industrial park is a $13-million state-of-the-art factory set up by Park’s Sausages Co. in late 1990 that employs 250.

But just across the street from the gleaming red brick plant, things don’t look so rosy in the largely black neighborhood that borders the industrial park.

“It hasn’t helped the neighborhood one bit,” said Foster Jackson, a young unemployed man, as he gazed across at the Park Sausage factory from the porch of his house. “Nobody from around here can get a job.”

Mills said she knows that some Park Circle companies have hired workers from the surrounding neighborhoods but she admits that she doesn’t have exact figures.

A General Accounting Office study of Maryland’s enterprise zones in 1988 seems to lend some support to Jackson’s feelings.

“Our evidence generally indicated that the Maryland program did not stimulate local economic growth as measured by employment or strongly influence most employers’ decisions about business locations,” the congressional agency said.

Jerry Wade, enterprise zone administrator for Maryland, argued that things would be much worse if enterprise zones had not been set up.

He said the Maryland program has created 2,000 jobs since it came into effect 10 years ago and will cost state and local governments some $3 million in 1992-93.

But some experts question whether the money could not be used more effectively.

“Is the benefit gained worth the cost?” asked Ellen Aprill, a tax professor at Loyola Law School in Los Angeles. “Our past experience with tax incentives indicates that the cost can be heavy, often much heavier than expected.”

In a guest article in the Los Angeles Times, the former Treasury Department official suggested that federal money might be better spent on other ways to help America’s cities, such as for health, education and job training.

“Enterprise zones as stand-alone programs don’t make much sense,” said Chris Walker, a researcher at the Urban Institute think tank in Washington.

In order to work, they must be small, targeted to areas that already have some businesses and be combined with other types of government assistance, he said.

At best, enterprise zones move economic opportunity from one area to another, said Lester Thurow, dean of the Massachusetts Institute of Technology’s Sloan School of Management.

“All you’re doing is shuffling the deck,” he said.