How to Make Empowerment Zoning Work

On Saturday, the Clinton administration is scheduled to announce that it has finally given Los Angeles empowerment zone status and the hundreds of millions of dollars in social services and tax subsidies that go with it. Mayor Richard Riordan and the City Council might learn from the numerous mistakes made by the six other cities chosen earlier.

Of the six programs, only those in Baltimore and Detroit can be considered successful; both cities have created several thousand new jobs. Detroit Mayor Dennis Archer has used federal funds to leverage more than $1 billion in additional private sector funding, mostly from the Big Three auto makers.

On the other hand, the zones in Camden, N.J., and New York’s Harlem and to a lesser extent in Atlanta and Chicago have been miserable failures. Only a few hundred jobs have been created in each of the zones, and both capital and private sector support has been lagging.

So what is the difference?

* Containing political infighting. Rather than housing the program within City Hall and making it a honey pot of patronage, Baltimore Mayor Kurt Schmoke convinced the City Council to set up a nonprofit organization to administer the program and to give Empower Baltimore great autonomy in getting the job done.

* Creating a sense of teamwork between the various stakeholders, particularly the community groups vying for funds. In Camden, such teamwork was successful in forging an excellent grant application, but once Camden received the grant, everyone pushed for their pet projects, and progress has been slow.

* Dealing aggressively with “hard-core unemployables.” Empowerment zones offer companies that employ zone residents a $3,000 tax credit per employee. Riordan and the L.A. council must recognize that the funds available for so-called job readiness programs will be the most important money spent.

* Minimizing red tape. The big problem here is in striking that fine balance between using an application process to effectively screen proposals versus having that process act as a barrier to participation, and there is no easy solution.