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Washington--Though quickly obscured by news swirling around the REpublican takeover of Congress, the Clinton administration's December awards of six urban empowerment zones mark a watershed in how a smart federal government might deal with cities.

For once, Washington didn't tell cities what to do; instead it asked them what they could and would do to revive their most distressed neighborhoods. And then, the feds stuck to their guns and refused to make awards to cities that didn't produce solid home-front commitments.

A big range of those local commitments appeared among the 500 applications for the two types of awards--either as an empowerment zone, entitled to the $100 million plus significant tax credits, or designation as one of 95 enterprise communities to receive $3 million each in social service funds plus tax- exempt business bond financing.

America's most devastated big city--Detroit--turned in the star performance.

Top Detroit businesses, led by General Motors, Ford and Chrysler, pledged to create 3,275 jobs and invest close to $1.8 billion in the city's zone. Banks promised to increase their overall yearly lending in the zone by $17 million, including special aid for businesses "with marginal creditworthiness."

Major utilities said they'd expand service and, in some cases, reduce monthly bills in the zone. Insurance companies said they'd look for ways to provide affordable personal and commercial insurance coverage. Leading accounting and law firms agreed to discount their services by as much as 75 percent for zone businesses and non-profits.

A consortium of universities--Wayne State, Michigan State and the University of Michigan--agreed to focus resources of multiple departments on the target area.

Even the local media offered support: WXYZ-TV agreeing to produce one segment a week describing lending and job training programs, and the Detroit Free Press and Detroit News pledging a weekly empowerment zone bulletin board.

The bottom line in choosing winners, said HUD Assistant Secretary Andrew Cuomo, who guided the federal competition, was full grass-roots participation and the solid likelihood of "jobs, jobs, jobs" emerging. The applications, he said, produced "a level of creativity and energy" well beyond expectations.

The winning Baltimore plan, for example, focuses on job opportunities with Johns Hopkins and other medical centers and leverages $8 in outside commitments for every $1 of federal funds. Seven local foundations each pledged one percent of their assets for the next five years.

Philadelphia involved 1,500 residents in 450 planning meetings to hammer out its joint application with impoverished Camden across the Delaware River. Unprecedented bistate partnerships are promised--among them a computerized information network on regional employment and economic development, a technical assistance bank for small firms, a new community lending institution, and a "futures consortium" to give the targeted neighborhoods access to computerized information and adult learning programs.

Somehow, politicians and reporters have a tough time "getting" all this. "Archer's 'relentless' lobbying pays off," The Detroit News reported, as if Mayor Dennis Archer's jawboning with federal officials, not the sheer quality of Detroit's application, had carried that day.

"At the heart of the empowerment zones is the fantasy that government, by spending money, can fix society's brokenness," an Atlanta Journal columnist wrote. One wishes he'd read the startling local commitments in his own city's application.

"One hundred million will barely make a dent in Baltimore's pressing needs in housing, health care, public safety and employment," ran a Baltimore Sun commentary.

What these dispiriting evaluations miss is that this first-ever federal enterprise zone competition has already sparked a wave of local partnerships and commitments that's worth many times over any federal cash or tax benefit.

Local governments' applications also included some 1,200 requests for waivers of burdensome federal regulations in housing, community development, education, the environment and other fields. Various departments are now reviewing each waiver bid. Hundreds of communities may benefit from a less intrusive federal presence.

The new zone program may run into heavy seas in the new Republican Congress. Perhaps it will be Washington's last great urban initiative. Ironically, it may also be the best ever.
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Title Annotation:Enterprise Zones
Author:Peirce, Neal R.
Publication:Nation's Cities Weekly
Date:Jan 23, 1995
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