L.A. Expected to Get Empowerment Zone

Under the federal budget accord reached this week, Los Angeles is one of the cities expected to get a federal empowerment zone, a specially designated area aimed at reviving inner cities by giving employers tax breaks.

Mayor Richard Riordan has been all but promised a spot on the list this time, sources said Wednesday. In late 1994, in a profoundly embarrassing snub, Los Angeles missed out when the first six empowerment zones were chosen because the city’s application was found wanting.

Empowerment zones are intended to rejuvenate communities by attracting employers who promise to hire residents in exchange for tax credits and other incentives. The six zones in New York, Chicago, Baltimore, Detroit, Philadelphia / Camden and Atlanta have gotten off to a slow start, but supporters say their benefits are beginning to multiply.

Riordan, who personally lobbied President Clinton regarding empowerment zones when the two rode together to a news conference in Mar Vista last month, was meeting with the mayor of Moscow on Tuesday morning when Vice President Al Gore called to give him the good news that the empowerment zone program had survived in the budget. Although Los Angeles is not guaranteed a spot, the city’s chances are good because 20 zones will be created, including 15 urban sites.

“I feel great about it,” Riordan said Wednesday. “There are no promises, but we’ll work like hell. We’re optimistic.”

Riordan said empowerment zones were among a handful of key items included in a handwritten note he gave to Clinton during their ride together. Riordan also lobbied Housing and Urban Development Secretary Andrew Cuomo, Senate Majority Leader Trent Lott (R-Miss.) and House Speaker Newt Gingrich (R-Ga.) in recent weeks.

The city received a $450-million consolation prize when it lost its empowerment zone in 1995 in the form of the Los Angeles Community Development Bank, which has made $38 million in loans, representing 1,100 jobs, to companies in the Los Angeles Supplemental Empowerment Zone.

With a second chance now, Riordan and his aides point out that the city could have the best of both worlds: the community development bank plus empowerment zone tax credits starting this year.

“We’re the big winners. The Community Development Bank is much more valuable than the empowerment zone would have been. Everything helps,” Riordan said.

Like many of the provisions of the budget agreement, details of how much money would be devoted to empowerment zones and how and when the zones would be designated remain sketchy. Legislation still must be drawn up to enact the proposed budget and it then will have to be approved by Congress.

It was not immediately clear how much would be set aside for each empowerment zone. In the first round, the six zones each got tax credits, federal grants and other incentives worth about $350 million.

“We think the [budget] legislation basically authorizes the HUD secretary within 120 days to designate two additional empowerment zones from among a group of candidates which I can’t define, except to say Los Angeles and Cleveland are certainly among them,” one official said. “Los Angeles is a strong potential candidate, but this will be a competition and there aren’t any guarantees in this process.”

Sen. Barbara Boxer (D-Calif.), who recently placed a call to Cuomo pressing for Los Angeles to be selected, said that “Los Angeles would be a perfect candidate for this.”

“It’s not a done deal but if anybody deserves it, it’s L.A,” Boxer said. “We were very disappointed it was not included in the first round.”

Los Angeles officials will propose the same zone that they did in 1994.

Running from the east side of downtown through Boyle Heights and south along the east side of the Harbor Freeway to Watts--plus a section of Pacoima in the San Fernando Valley--the zone encompasses 19.3 square miles, according to city documents. Median household income in the area is $15,991, with a 40% poverty rate.

Brooks and Wilgoren reported from Los Angeles and Fiore reported from Washington.