Valley Interview : Empowerment Zone Would Tap Pacoima’s Community Spirit

This fall the U.S. Department of Housing and Urban Development is expected to make the final selection of which six urban areas around the country will become federal “empowerment zones.”

A 20-square-mile area of Los Angeles--including a two-square-mile section of central Pacoima and parts of Lincoln Heights, Boyle Heights and a strip from South-Central Los Angeles to Watts--is expected to be one of the areas selected.

The Pacoima area was included in the city’s application to HUD not only because it is the poorest area in the San Fernando Valley, suffering from a 25% to 40% poverty rate and stubborn crime, but also because it is an increasingly activist community that has worked closely with local and federal politicians for empowerment zone status.

The six areas around the country that are finally selected by HUD will share in up to $100 million each for social service programs. Businesses there will be eligible for tax breaks if they hire workers from the neighborhoods or spend money to improve their facilities. The tax breaks will also be aimed at attracting new businesses to the areas.

The idea of empowerment zones was originally proposed by the Bush Administration to help revitalize sections of Los Angeles after the 1992 riots. As the presidential election neared, Bush vetoed a bill to establish them, an act that opponents attributed to his fear of being labeled a tax-and-spender.

After the November, 1992, election, the idea was resuscitated by the Clinton Administration, which has made empowerment zones the centerpiece of its urban revitalization program.

Whether the program will be effective remains questionable, largely because it follows similar efforts--Urban Renewal and enterprise zones, for example, which have received mixed reviews.

Rep. Howard Berman (D-Panorama City), a leading advocate for a Pacoima empowerment zone, talked to Times staff writer Timothy Williams about the zones.

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Question: What are empowerment zones, and , generally speaking, what is the idea behind them?

Answer: An empowerment zone is a discrete geographic area based on unemployment and income figures that the federal government has designated for special privileges. The idea came from Jack Kemp (HUD secretary during the Bush Administration) and was eventually supported by an interesting coalition from the left and the right of the political spectrum who believed that providing incentives for the private sector was the best way to aid areas suffering from crime and poverty. The idea is that if we focus our efforts on a particular area, we can bring results which might not happen if the effort was diffused over a wide area.

Q: Why is it important that central Pacoima be included in the city’s zone?

A: With its high poverty and crime rates and a very active citizenship, it fits all the criteria. We were fearful in the beginning that Pacoima would be left out. I’ve never been a champion of empowerment zones, but I knew that if the San Fernando Valley didn’t get one of these areas, there would be a sucking sound, and the area might go further downhill.

Q: In the same area as the proposed federal zone in Pacoima, there has been a state “enterprise zone” since 1980. It has been criticized for failing to attract many new businesses, for failing to generate much interest. How can the federal zone avoid the same fate?

A: The state enterprise zone has been one of the least marketed things in the world. In fact, until I read about it in your newspaper awhile ago about how poorly it was doing, I had forgotten we had an enterprise zone there. We can do better with outreach and by focusing on individuals and specific businesses and just by getting the word out.

Q: What kinds of federal aid will empowerment zones receive?

A: Companies in the area will be eligible for employer wage tax credits, meaning that any business in the zone will get tax credits for hiring people who live in the area. Businesses will also be eligible for tax-exempt facility bonds that will allow them to build or renovate a structure. There will also be the social service block grant, which provides money for purchasing and improving land, job training, transportation to and from work, and loans for new businesses.

While nothing is set yet, in the Pacoima area we plan on working to strengthen family support programs--concentrating on job training, child-care services and a gang intervention facet. To help businesses, there will be a business incubator training program, which will offer skills training and financial management counseling. The city and private corporations in the area will be involved in that part of it. There will also be a community development company to deal with the loss of jobs and the declining economic base.

We will also beef up local law enforcement with a cops-on-the-street program. There is a lot of potential for growth in that area. The most debilitating thing is crime and gangs.

Q: How will HUD choose just six areas, and what are the chances that the L.A. bid will be selected as one of the zones?

A: They will look at the local commitment, what the city and county are doing. See, this is a federal-local partnership. It is a bottom-up economic development project, so they want to see what the strategy is at the local level. Now in terms of being chosen, 77 other areas have applied, so there’s a lot of competition. I cannot fathom a situation where the Los Angeles area will not be selected, given all the L.A. area has been through in the last five years.

Q: Are you seeking certain kinds of businesses for central Pacoima? Manufacturers, for instance?

A: The major focus will be on small businesses, but the tax credit could be an incentive for medium-sized manufacturers to come in.

Q: Over the past 30 years, we’ve seen any number of government programs aimed at turning impoverished areas around. There’s been Urban Renewal, Model Cities, the War on Poverty and enterprise zones among others--each with a mixed record at best and a lot of local enmity at worst. How are empowerment zones going to be different?

A: I don’t build any huge amount (of expectations) into the empowerment zone alone, but in conjunction with the federal Crime Bill, and by providing seed money for defense firms, the empowerment zone in Pacoima will get more meaningful, and we can start turning that area around. What’s been missing before that we have here is the awareness that if you can’t make people feel safe, you can’t convince people to move into an area. That, and the fact that we’ve finally gotten some meaningful tax credits.

Also, we’ve had a welfare system that provides incentives for not working, which has undercut programs in the past.

Q: So if an empowerment zone is not a magic bullet, what other things need to happen to pull poor areas out of poverty?

A: Conversion programs for commercializing defense firms, more cops, revamping the welfare system to strengthen the incentive to work, more funding for education and training programs, a major expansion of child care so parents can take jobs--especially single parents.

The most important gulf in America today is between the majority that is making it and the underclass that has very little hope of making it in our society. They have very little stake in society. There is no opportunity, no education. Hopefully, empowerment zones will be something to turn that around.

The benefit is that this can become a showcase of what can be done in America as a whole. In a few years, we might be able to look at the area and answer the question “Can you address the chronic problems in this country?’