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In The Zone

It's been three years since Clinton's empowerment zones were first rolled out. Are they doing their job?

In 1994, the Clinton Administration rolled out the Federal Empowerment Zone and Enterprise Community (EZ/EC) Program with high expectations. So what has happened after three full years of empowerment zone operation? Have things improved, or is it just business as usual?

Those looking for quick fixes probably consider the empowerment zone initiative a failure. Even after receiving the official designation, zone administrators had to create governing bodies composed of government officials, business leaders and residents, as well as develop individual benchmark plans. In most communities, this process took at least one year to complete, according to the U.S. Department of Housing and Urban Development (HUD), which oversees the urban zones. (The U.S. Department of Agriculture oversees the rural zones.) In some cities, tension between the various factions made the process even more contentious.

According to HUD, there were no explicit goals in the EZ/EC initiative regarding small business. The philosophy of how to revitalize the community was left up to the communities. However, all zones included small businesses in the process because they are considered big job creators.

Defining a zone as successful is not a cut-and-dried issue, adds Noah Temaner Jenkins, project coordinator for the National Empowerment Zone Action Research project being conducted by the Egan Urban Center in Chicago. "The biggest problem is that we don't know what the empowerment zone does by itself because it doesn't act by itself," says Jenkins. "So many other things are going on--other government programs and economic factors, such as [having] one or two major corporations in the area."

Jenkins believes the restraints are built into the structure of empowerment zones. "The rhetoric says they will alleviate poverty, put residents back to work and facilitate opening new businesses," she says. "But the program doesn't provide all the resources needed to do that right away."

Another big problem Jenkins sees is that, except for the tax incentives, the program is geared toward preparing residents for jobs. "The program is not designed for much direct business assistance, though some zones are doing it," she says.

Still, small business does stand to benefit from the zones, at least in part. "One good thing the zones are doing is drawing [positive] attention to historically economically depressed areas that have problems partly because of negative images."

This, in turn, is changing the perceptions of investors and business owners who had written the areas off.

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This article was originally published in the May 1998 print edition of Entrepreneur with the headline: In The Zone.

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