Set Back by Politics and Mismanagement

When the second stage of the Fulton Flour and Bag Mill loft project went up in flames here in mid-April, it became more than a setback for the highest-profile development in Atlanta’s empowerment zone.

It became a metaphor for the zone itself, so embroiled in political infighting and questionable practices that Mayor Bill Campbell fired 18 of 22 staff members two years ago and replaced the initial executive director.

Supporters of the empowerment zone are struggling to recapture the optimism and promise that came with the zone’s creation 18 months before the 1996 Summer Olympics.

It’s no easy task.

“The real challenge in Atlanta is reconciling the community with the more established political elite,” said Michael Rich, an Emory University professor of American politics who monitors zone developments in Atlanta for the U.S. Department of Housing and Urban Development. “The struggle has been between the citizen leaders and the mayor over who’s going to drive this. That fundamental disagreement has never been resolved, so you keep fighting the same battles.”

That fight has all but neutralized the program.

In the 4 1/2 years since Atlanta was awarded an empowerment zone--and $100 million in federal money to seed neighborhood revitalization--little work has been done within the zone’s 9.29 square miles. There have been a few successes, including a program that offers $8,000 grants to low-income home buyers and a One Stop Capital Shop that advises new entrepreneurs then matches them with lenders.

But for the most part, the grand plans of December 1994 to create a series of “urban villages” remain unrealized.

“We hear about it, we see it on TV, we read about it, but they never tell you how to get into the program,” said Ernest Nesbitt, 79, a retired railroad worker who has lived in Atlanta’s battered Pittsburgh neighborhood since age 3. “I need some plumbing work done inside my house, and we don’t know who to get in touch with to find out where we could get some of that help.”

“It’s a strange system,” adds Rich, “because it isn’t a system.”

Atlanta’s empowerment zone application called for using $100 million in federal money to augment $700 million in local private and public funds to revitalize neighborhoods through a mix of housing, social intervention and economic development programs.

But the zone’s administrative staff focused primarily on big-ticket economic development, infuriating neighborhood leaders who felt the zone’s premise was being abandoned.

A cumbersome two-tier approval process, in which community leaders hold crucial votes, led to months-long delays in projects, Rich said. Then state and federal audits accused administrators of improperly using zone money for non-zone programs, including an $8,000 grant to a staff member to buy a house outside the zone.

Mayor Campbell fired the initial staff in August 1997, shifting much of the work to his own administrative offices, and let Executive Director Paul White’s contract expire four months later. The program remained in “suspended animation” for a year, Rich said, until Joseph Reid, a housing and economic development advocate in nearby Athens, was named director in late 1998.

As a result, empowerment zone projects have been left dangling, some with funding approved but no checks cut. Of $78 million in approved projects, only $9 million had been spent by early May, Reid said. And some city bureaucrats, frustrated by zone officials’ seeming ineptitude, have retreated from the program.

The high-profile problems also led business leaders to distance themselves from what was designed as a partnership, leaving the program without the stable of on-loan private-sector executives that zone backers expected to help launch the program.

“When it publicly goes into the ditch, the private sector pulls back,” said Reid, who helped prepare Atlanta’s zone application. “Capitalists are not in the business of paying for controversy.”

Reid spent his first five months in the job trying to mend fences and, in essence, reinvent the management structure, including enticing local companies to loan executives to the program.

Although the zone includes a housing assistance program that provides residents up to $8,000 in grants to buy homes, zone administrators do not link it to programs that encourage companies to hire zone residents, Reid said, acknowledging it as a shortcoming. Thus no zone officials meet with new hires to encourage them to buy houses in their own neighborhoods--an integral part of the urban village concept that zone officials say is their goal.

The result is a further concentration of the unemployed.

And in the Cabbagetown section next to the Fulton mill fire, while home ownership has more than doubled in recent years, prices have skyrocketed. Century-old wood-frame “shotgun shacks,” former homes of low-wage mill workers, now go for more than $100,000, prices driven by new residents moving into the neighborhood rather than earnings of the existing residents.

While low-interest home-improvement loans are available for existing residents, many are retired or living on fixed incomes, resident Rhonda Hood said. The risk is that continued gentrification will force them out.

“A lot of these people can’t afford to pay back a loan,” Hood said. “It’s ridiculous.”