Clinton unveils $8.1 billion plan to help cities 110 neighborhoods, 'zones' to be targeted

May 05, 1993|By David Conn | David Conn,Staff Writer

President Clinton introduced an $8 billion plan yesterday that represents his first major attempt to help America's beleaguered cities, fulfilling a campaign pledge he made to the nation's mayors.

In a morning conference call to a handful of city and state politicians, including Baltimore Mayor Kurt L. Schmoke, Mr. Clinton outlined his proposed Economic Empowerment Act that he said would "result in new economic growth, opportunity and hope in areas long denied their piece of the American Dream."

The centerpiece of the program, which would expire after 10 years, is a package of tax breaks, housing credits, job training incentives and community banks, schools and policing programs worth $8.1 billion, half of it new funding that is subject to the approval of Congress. The programs would focus on 110 areas around the country: 100 "enterprise neighborhoods" and 10 "empowerment zones." The latter would be eligible for a higher level of aid.

The zones and neighborhoods would be selected by an Interagency Enterprise Board that would evaluate proposals submitted by the communities themselves, Mr. Clinton said.

Mr. Schmoke said he has at least five sites in mind to apply for the program: Port Covington in South Baltimore, the former Esskay plant in East Baltimore, the Sandtown-Winchester neighborhood, the East Monument Street area near the Johns Hopkins Medical Institutions and the Cherry Hill neighborhood.

But despite his close relationship with the president, Mr. Schmoke warned that Baltimore was by no means assured of a spot on the list of the 110.

"The fix is not in," he said at a news conference, held at the Parks Sausage Co. in Northwest Baltimore. Parks, which moved to the Park Circle Industrial Park two years ago, was the largest recipient of state and city money at the site after it was declared a state enterprise zone in 1982.

The Economic Empowerment Act "is a fundamental departure" from both traditional Democratic programs and from the enterprise zones legislation offered by President Bush last year, Mr. Clinton said during the conference call. That bill passed Congress, but Mr. Bush vetoed it because Congress added several provisions he opposed.

Also joining Mr. Schmoke in the telephone audience were the mayors of New York, Los Angeles and York, Pa.; the governor of Kentucky and a Chicago city commissioner.

According to the president, the $8.1 billion proposal would include:

* Tax breaks. The president's 1994-1998 budget includes $4.1 billion in tax incentives, three-fourths of it in employment and training wage tax credits for zone residents, rather than tax breaks for the businesses in the zones. Most of those breaks would go to the 10 empowerment zones.

* Targeted grants. About $500 million in already budgeted enterprise grants would be allocated to the zones and neighborhoods, and another $500 million would go to beef up police presence in the communities, "a substantial amount" of which would be targeted to the designated enterprise areas.

* Additional targeted spending. At least $3 billion in existing funds from various Cabinet departments would be spent in the selected communities.

One major difference from previous enterprise zone proposals, Mr. Clinton said, would be the communities' involvement in planning the programs.

"Under our program, not a single dollar will go out without a coordinated strategy developed at the grass-roots level," he said.

The communities would have to show how they plan to coordinate all the money they might receive from city, state and federal programs, and how they plan to attract private sector support.

A benefit of the community-developed plan, Mr. Clinton said, is that it will force the myriad federal and state programs, with their crazy quilt of regulations, to work together toward an overall economic development strategy within a community.

Finally, the designated communities would be able to petition the Interagency Enterprise Board for a waiver of various federal regulations within their zones, which wasn't a part of previous plans.

"I think it will meet with a lot of support out in the country among Republicans and Democrats, and I hope we'll get that kind of bipartisan support here in the Congress," the president said.

Stuart Butler, director of domestic and economic policy studies at the conservative Heritage Foundation, praised the emphasis the program places on competition among the communities.

But, he said, Mr. Clinton's plan represented a reversal of the original idea behind enterprise zones, which "was to clear away government from these areas, deregulate, reduce taxes and let private individuals" invest and develop the areas.

"Instead, he's almost got a rerun of the Model Cities program under [President Lyndon B.] Johnson, where he's trying to cram as many programs into these neighborhoods as possible," said Mr. Butler, who wrote the first paper on enterprise zones in the United States in 1979.

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