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So what's next?

The Clinton administration has had little to say about its own empowerment zones and enterprise communities policy since announcing the winners in late December (see The Weekly, 1/2). Vice President Al Gore toured the empowerment zones, but almost no promotion of the policy as a national urban initiative has occurred. The silence may indicate that the White House is overly sensitive to critiques of past urban initiatives and fears anything it does in this field will look bad.

But if the administration picks up on a few relatively simple rules from cities and states that already have established enterprise zone programs, its national policies could still succeed where previous attempts have failed.

The first rule is not to allow critics to define success on their terms. Those who denigrate the states' zones try to frame the issue in an all-or-nothing fashion: the program must identify and empower all disadvantaged residents and rebuild all deteriorating infrastructure, or else the whole idea is a fraud.

But smart local administrators have learned to promote zones as an incremental policy that blends with the city's larger development priorities. Zone officials declare sound, achievable objectives and enlist the support of the community and the media to carry them out. Sensible projects the city should be working on anyway become part of the zone strategy. It's a rational and legitimate approach to public administration.

The second rule is not to allow the policy to be about the effectiveness of any federal incentive or benefit. No matter how many jobs are created in the zones, researchers will say either that the jobs were merely shifted (glossing over the benefits of creating jobs in closer proximity to low-income areas) or were not demonstrably linked to the incentives. To some extent, the researchers are correct.

The incentives may well have impacts, but sorting them out from other factors at play in business location decisions becomes a convoluted mindreading exercise. Abatements alone will not transform an area, nor will they set the stage for reinvestment. Evaluations of the zones should look at the incentives' poorly understood role in motivating the cities themselves, not just at their direct effects on private investment behavior.

The third rule is that the policy should be characterized as an opportunity to experiment with a wide range of potential solutions to a thorny set of challenges. The administration has seemed timid on this score, with representatives saying that they want to see how the nine empowerment zones work before expanding policies to the lower-tier zones.

A wiser course would be to focus attention on the accomplishments of the cities that did not win an EZ designation. Progress in these zones is pure gravy; it doesn't cost the taxpayer anything above current expenditure levels. Best of all, successful outcomes in these areas can be replicable in other cities that did not receive the big block grants.

The Clinton administration did the right thing by inviting all participants to develop their own benchmarks for measuring progress. Feedback from these hundreds of experimental initiatives will generate valuable information for future generations of redevelopment planners. Indeed, many cities are testing out ideas in their zones that they would never have attempted had they not sought federal designation.

The administration should take the opportunity to grab a little credit for the small victories that will be won every day, not only in the empowerment zones, but also in the enterprise communities and in the communities that were not selected. Most important, the administration should look to the future by declaring its interest in a broad-based program that can underscore the ongoing work in hundreds of cities. A somewhat modified version of the original idea to offer the zones budget-neutral assistance might be workable even if, as seems likely, a number of individual economic development, housing, training, transportation, crime prevention and other funds are rolled into block grants. Washington could encourage cities to dedicate portions of these funds to the zones, letting the cities themselves demonstrate the priority they place on their own zone programs.

Another option, discussed recently by Congresional Republican leaders and urban Democrats, is to offer special capital gains tax reductions to areas that submitted eligible applications in 1994. Although some Clinton policy advisors earlier favored a zone-based capital gains benefit, the administration so far has not weighed in on this issue.

The administration should realize that the most important thing is to keep the participating cities actively pursuing their self-set goals. This means recognizing the effort invested by the 500 applicant cities and formulating new, low-cost forms of support that can be widely accessible to distressed areas.

By moving the program forward, the administration could help to write a hopeful new chapter in the history of urban policy -- a chapter that challenges cities to tackle their own problems and reinforces their actions within the bounds of political and budgetary reality.
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Title Annotation:Enterprise Zones
Author:Cowden, Richard
Publication:Nation's Cities Weekly
Date:Jan 23, 1995
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