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Harlem renaissance - takes two: after years of neglect, will empowerment zones allow Harlem to thrive once again?

Perhaps a little skepticism is to be expected. The thought that Harlem, after years of neglect from private investors and major corporations, is suddenly primed for an economic explosion seems a bit too good to be true.

But seeing is believing, at least at this point. Over the last two years, no fewer than a dozen large businesses, including Walt Disney Co., Rite Aid Corp., Viacom Inc., and Gap Inc., have announced they're opening major retail outlets in this neighborhood that became one of six federally funded empowerment zones in 1995. Meanwhile, Magic Johnson announced that his movie theater chain was coming to town, and Harlem USA, a massive retail/entertainment complex, is set to break ground soon within shouting distance of the Apollo Theatre.

"Some are very enthusiastic. Some are cautiously optimistic. Others are downright skeptical," says Deborah Wright, president and CEO of the New York Empowerment Zone. She oversees the massive $300 million program intended to revitalize a community that was once considered a pariah by private investors. "Harlem has been promised a lot in the past and a lot of promises have been broken," she explains. "We have to prove that we're worthy of this community's trust." (In addition to Harlem, New York's Empowerment Zone takes in the Washington Heights/Inwood neighborhood.)

New York's situation is unique in that the governor of the state and the mayor of the city both matched the federal funding commitment of $100 million. So New York City has $300 million to spend, while other zone sites may have a third of that amount.

The empowerment zones have been touted by supporters as a solution to reviving inner-city decay by luring big business to deprived communities. In addition to New York, other zone sites include Atlanta, Baltimore, Chicago, Detroit and the Philadelphia-Camden, New Jersey area.

Among the tax incentives for corporations are annual tax credits of up to $3,000 for each empowerment zone resident employed. Zone employees can receive a tax deduction of up to $37,500 during the first year of operation, if they open a business in a specific location within the zone. Meanwhile, qualified businesses are eligible for a new category of tax-exempt bonds that will fund the financing of new or renovated facilities.

This is all good news. But many Harlem residents and small business owners were concerned at the outset that they would be left out of the economic revival, while outsiders cashed in. While it may be years before a judgment can be made, there are some skeptics who are concerned that this empowerment zone may benefit corporate CEOs looking for a fresh marketplace--more than inner-city residents. The question is: Will having a GAP on 125th Street help Harlem residents or will it simply fatten the retail chain's bottom line?

"The zone has awesome potential," says Lloyd Williams, president and CEO of the Greater Harlem Chamber of Commerce. "Unfortunately, the major beneficiaries of the zone to date have been some of the large corporations. You have a Pathmark coming here and we need it. But it's the Pathmarks that are benefiting from the tax credits, employees' benefits and loans that are available, as opposed to the small mom-and-pop stores that really need to benefit from these zones," says Williams.

Drew Greenwald, president of Grid Properties, which co-developed the $56 million Harlem USA complex, says his project represents the largest private commercial investment ever made in an inner-city neighborhood, and will create more than 500 permanent jobs. Many businesses are now flocking to inner cities like Harlem because the numbers add up, Greenwald believes. According to Grid Properties, Harlem residents spend approximately $205 million a year on apparel, and $33.6 million on books, mostly outside of their own community. Grid Properties is developing Harlem USA in conjunction with the Gotham Organization and the Commonwealth Local Development Corp., a nonprofit Harlem group that has owned the 125th Street parcel since the 1970s, Greenwald says.

"Areas like Harlem have been looked over in the past," says Greenwald, "but now a lot of those companies realize there is a huge market that they're not reaching. As they reach saturation levels in other areas and have to reach new markets, it's easy to look at Harlem and realize that there are economic opportunities here."

Carver Federal Savings Bank Chairman Thomas Clark sits on the board of directors of the Business Resource & Investment Service Center (BRISC). Carver is committed to working with the resource center to help finance small businesses that come through BRISC, he says. But, Clark points out, Wright has a difficult challenge ahead. "She's going to have her hands full working with the existing businesses and strengthening them as well as attracting new business. The challenge is making sure the people there now get a piece of the pie as well."

Thus far, Wright is optimistic that both corporate and community concerns can be addressed. While she doesn't dispute that the zones are tailored to make them as attractive as possible to large corporations, she says there's enough meat in the zone initiatives to give small businesses and entrepreneurs something to look forward to.

A joint venture between the Up per Manhattan Empowerment Zone Development Corp. and the Small Business Administration led to the creation of BRISC, which has allocated $500,000 in capital for those looking to start up new businesses or renovate existing establishments. BRISC is designed to provide entrepreneurs and small businesses with information on how to start a business and advice on how to benefit from empowerment zone tax incentives. "If you just have an idea on starting a business, it's difficult to take that from the drawing board to reality," she says. The resource center is equipped with a library and computer terminals linked up to the Internet, with manuals on a cross section of businesses to help people write their own business plans and research the marketplace.

BRISC is crucial to inner-city development, says Charles B. Rangel (D-New York), architect of zone legislation. "It's critical because now those who want to start or expand a business will have access to a local partner to help them realize those aspirations."

But even with these incentives, Wright declares that life will change for many small business owners in Harlem--and not always for the better. Many who have operated small businesses for years have done so on a make-do basis because they've either been locked out of capital markets or had to operate on a shoestring budget.

But Harlem will benefit, says Williams, because the influx of jobs will bring residents who have higher disposable incomes and education levels. And as the educational level rises, says Williams, you have a more informed electorate and a community that knows how to better utilize its talents and resources. "But revolutions don't happen overnight. The zone is a tool. We have to make sure it's not the only tool that we have."

For more about the Harlem Empowerment Zone Initiative, call 212-932-1902.
COPYRIGHT 1997 Earl G. Graves Publishing Co., Inc.
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Author:Smith, Eric L.
Publication:Black Enterprise
Date:Feb 1, 1997
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