No EZ Answers

No EZ Answers

How can this be, when so much money was spent to improve these areas? And why is it that the program did not help entrepreneurs like Morris and Johnson? It's complicated--really complicated--say the experts.

First, $1 billion sounds like a lot of money, but it's like a cup of water dumped in a desert--hardly enough to make a difference in areas dominated by shuttered factories, run-down housing and desperately poor people.

Second, there aren't strong federal guidelines dictating how the flexible-funding grants should be spent. Empowerment Zone communities have developed plans using various approaches, usually a combination of investments in neighborhood development, economic development and human services. But in some areas, prolonged squabbling between political entities and community groups over how to use the money bogs down implementation of the plans.

"In Atlanta, [a round-one community], they didn't have the capacity to translate their strategic plan into tangible projects and initiatives," says Michael Rich, associate professor of political science at Emory University and part of a national team of researchers that has studied Empowerment Zones.

"Whoever stayed at the table long enough got their ideas included in the final strategic plan," says Harrison Blackmond, chair of the Blackmond Givens Group, which provided management services to the Empowerment Zone in Detroit, another round-one city. "The focus in Detroit was on 'fixing' people--providing job training, counseling, medical services. But if we were able to fix people, they moved out of the zone as quickly as possible."

Overall, Blackmond believes the program did not accomplish much for the people it was supposed to help. "The social service agencies were paid," he observes, "but very little of the money made a difference in the lives of individuals in the community."

Most of the round-one Empowerment Zones have wound down, although a few, such as Atlanta, have permission to continue using their unexpended grant funds. In other cities, like Knoxville, community groups and city officials continue to fight over how to spend their remaining dollars.

Even positive stories sometimes highlight the program's problems. In Chicago, the CC Investment Group, which owns and manages $25 million worth of affordable and moderate-income apartments, benefited from the Empowerment Zone by saving $160,000 in transfer and sales tax exemptions. However, the company had to hire one consultant to track down these opportunities and another to actually take advantage of them.

"The program is well-meaning, but you have to hire consultants to figure it out," says Peter Cunningham, 37, managing partner of CC Investment Group, which he co-founded with Scott Cimino, also 37. "There doesn't seem to be one source of information about these benefits, and that makes things very difficult."
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This article was originally published in the July 2007 print edition of Entrepreneur with the headline: No EZ Answers.

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